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Oil hits lowest this century as coronavirus crisis hammers demand

Published 04/21/2020, 09:37 PM
Updated 04/22/2020, 07:16 AM
© Reuters. FILE PHOTO: An oil pump jack pumps oil in a field near Calgary

© Reuters. FILE PHOTO: An oil pump jack pumps oil in a field near Calgary

By Alex Lawler

LONDON (Reuters) - Oil slumped to less than $16 a barrel on Wednesday, hitting its lowest since 1999, with the market awash with excess supply as the economic fallout from the coronavirus pandemic hammers demand for fuels.

A glut has been building since OPEC+, led by Saudi Arabia and Russia, failed to renew output cuts last month. OPEC+ agreed new curbs this month, but government lockdowns to contain the pandemic have cut fuel demand more steeply.

Brent crude (LCOc1), which fell 24% in the previous session, touched $15.98 a barrel, its lowest since June 1999. It was trading down 62 cents, or 3.2%, at $18.71 by 0950 GMT.

U.S. West Texas Intermediate (CLc1) was down 60 cents, or 5.2%, at $10.97.

"The oil market is in deep trouble and is unlikely to shake off its malaise any time soon," said Stephen Brennock of oil broker PVM. "Demand is low, supply is high and storage is full."

The falls follow two of the wildest days in the history of oil trading, with supply looking likely to outstrip demand for months to come. The nearby U.S. contract fell into negative territory for the first time ever on Monday.

"Be prepared for more surprises in this broken oil market," said Rystad Energy's head of oil markets, Bjornar Tonhaugen.

Brent's low on Wednesday takes the price back to a time when OPEC was also tackling a supply glut and business and consumers were concerned - unnecessarily as it turned out - about the Millenium Bug affecting computers after the turn of the century.

In the latest sign of excess supply, the American Petroleum Institute on Tuesday reported that U.S. crude inventories rose by 13.2 million barrels, against analyst expectations for an increase of 13.1 million barrels.

The U.S. government's official supply report is due later on Wednesday.

In an effort to shore up the market, OPEC+ this month agreed to reduce output by 9.7 million bpd. Other nations, including the United States, have also said they will pump less.

Producers are considering further steps. Saudi Arabia on Tuesday said that it was ready to take extra measures with other producers, though the next formal OPEC+ meeting is not until June.

© Reuters. FILE PHOTO: Crude oil storage tanks are seen from above at the Cushing oil hub in Cushing

In a development that raises doubt over a formal U.S. supply cut, two of three Texas regulators on Tuesday delayed a vote to force producers to curtail output, predicting the move would land the state in a legal minefield.

Latest comments

Free oil. Trump.
The historical deal Trump said that will stabilize oil price and save hundreds of thousands american jobs, you mean it didn't work?   How could that be?  Say it aint so, Donald.....
What We need to understand is demand in the market, deposit huge Protection cuthing coming nearest to 10,000,000 bbrl.The issue still continuing matter of time when the oil price will start increase Like rocket
Great job Donald. 2.14million American lives saved thus far.  You'd have heard this by now if the keny8an was still in office.
omegalulzHighest death count in the World. Yeah we ALL know China has lied, but even then you still beat them.
2.14 million lives, wow that's very precise, must took The Donald at least 45 seconds to come up with this one.....
lol. hot off the presses, CRASH.
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