Crude oil has dropped to the lowest level in almost two decades which threatens the eradication of a whole decade of demand growth, on Monday
The US benchmark tumbled to $16.81 per barrel, a level last observed in 1999, taking the combined moth-to-date losses to 16.24%, having declined by 56 percent in March.
The oil market has been under the squeeze because of a spate of reports on weak fuel utilization and grim forecasts from the Organization of the Petroleum Exporting Countries (OPEC) and the International Energy Agency.
“It hasn’t reach capacity but the fear is that it will,” said Michael McCarthy, chief market strategist at CMC Markets in Sydney.
He further stated that “There’s still some concern that the 10 million barrels per day cut won’t be enough to offset demand destruction so the outlook for oil prices remain subdued.”
Oil costs have fallen by over 80% or $50 a barrel since the beginning of the year, after the intensifying effects of the coronavirus and a breakdown in the first OPEC+ agreement. Producers around the globe proceeding to pump, that is causing a fire-deal among brokers who don’t have access of stockpiling.
The producers of North America have cut their budget limits by generally 36% on a year-over-year basis, as indicated by a Sunday note from James West, at Evercore ISI, that universal organizations have cut spending plans by 23%.
