Oil futures extended their plunge Wednesday (18 March), sending U.S. prices to their lowest finish since 2002, as countries continued to lock down to slow the spread of the COVID-19 pandemic, while Saudi Arabia and Russia remain on track to flood the world with crude in a global price war, MarketWatch reported.
Oil dropped 24% to a more than 18-year low on Wednesday as the coronavirus pandemic continues to sap demand for crude, and rising worries about a global recession led to fears of longer-term demand destruction.
Closing the session on Wednesday, West Texas Intermediate crude for April delivery on the Nymex fell 6.58 USD (equivalent to more than 24%) to settle at $20.37 a barrel, with the front-month contract logging the lowest finish since Feb. 20, 2002, according to Dow Jones Market Data.
May Brent crude on the London dropped $3.85, or over 13%, at $24.88 a barrel, with prices ending at their lowest since May 8, 2003.
Adjusted for inflation, front-month Nymex WTI oil trades around its lowest levels since March 1999, according to Dow Jones Market Data.
“Oil is by far one of the biggest casualties from the novel coronavirus outbreak,” said Lukman Otunuga, senior research analyst at FXTM. “WTI crude and Brent have both depreciated a staggering 60% since the start of 2020 and could extend losses as the pandemic darkens the outlook for fuel demand.”
“To rub salt into the burning wound, the raging price war between Saudi Arabia and Russia is fuelling oversupply concerns,” he told.
The Trump administration has signaled support for a stimulus package of $1 trillion or more, including direct payments to individuals and rescue packages for industries. The Federal Reserve, after moving to cut interest rates to nearly zero on Sunday (March 15) and taking additional stimulus measures, on Tuesday (March 17) unveiled a commercial paper facility aimed at providing a liquidity backstop to the market.
Meanwhile, following a failed attempt to reach an agreement to further curb oil production, current production cuts by the Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+, are set to expire at the end of this month.
Oil prices lost more ground after data from the Energy Information Administration Wednesday revealed an eighth consecutive weekly rise in U.S. crude supplies.
Particularly, U.S. crude supplies rose by 2 million barrels for the week ended March 13 in 2020. Analysts polled by S&P Global Platts expected the data to show a rise of 2.6 million barrels. The American Petroleum Institute on Tuesday reported a fall of 421,000 barrels.
Besides, The EIA also said supply declines of 6.2 million barrels for gasoline last week, higher than the expectations for supply declines of 3.8 million barrels from a survey. Distillates lost 2.9 million barrels last week, lower than the expectations for supply declines of 3.2 million barrels from the Platts survey.
Also during the Wednesday session, April gasoline fell 10.3% to 63.77 cents a gallon, with prices for the front-month contract marking another record low settlement. April heating oil lost 7.9% to 95.42 cents a gallon that was the lowest settlement since January 2016.
April natural gas lost 7.2% to $1.604 per million British thermal units, the lowest closing level since 1995.