Crashing Demand Takes Oil Price to 2002 Low

Oil prices extended their slump Wednesday, with WTI hitting the lowest level since 2002 as planned output cuts were deemed insufficient to offset a coronavirus-fuelled slump in demand, The Guardian reports.

The benchmark WTI contract tumbled to $19.20 per barrel, the lowest level in 18 years. Shortly after, around 11:20, WTI was down 2.3% at $19.66 per barrel and Brent showed a 3.6% loss at $28.54.

The world’s energy watchdog, IEA told the market to brace for the lowest oil demand in 25 years because of the global lockdown across numerous countries and territories to contain the virus.

Oil demand will this month hit its lowest levels for the year, according to the International Energy Agency, falling 29million barrels a day below last year’s average to levels not seen since 1995.

OPEC kingpin Saudi Arabia and Russia on Sunday reached a deal to slash production by 9.7 million barrels per day from May.

Prices briefly bounced Tuesday after U.S. President Donald Trump tweeted that producers were considering cutting 20 million barrels per day – comments later backed up by Saudi energy minister Prince Abdulaziz bin Salman.

Global oil demand will fall by a record amount this year as lockdown measures imposed to curb the COVID-19 outbreak bring the economy to a virtual halt, the International Energy Agency said Wednesday.

For 2020 overall, demand will fall by 9.3 million barrels per day (mbd), with April alone down 29 mbd from a year earlier to levels last seen in 1995, the IEA said in its latest monthly report.

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