Oil drops 25%
U.S. oil prices descended 25% on Monday over assumptions that worldwide storage will soon be full as the ongoing coronavirus pandemic continues to make a negative impact on the demand.
West Texas Intermediate for June delivery plunged 25%, or $4.27, to trade at $12.71 per barrel, whereas the international benchmark Brent crude traded 6.2% lower at $20.11 per barrel.
WTI for July delivery slipped more than 11% to $18.84 while the August contract tumbled down more than 7% to $22, implying that the Wall Street does not predict a meaningful recovery in the next couple of months.
“The market knows that the storage problem remains, and we are on a calculated path to reach tank tops in weeks. Actions are needed now as the problem stopped being theoretical and far away. The storage clock is ticking for producers and we are approaching the final countdown if no further action is taken,” Bjornar Tonhaugen, head of oil markets at Rystad Energy, stated.
WTI, the U.S. benchmark, has dropped more than Brent while the traders are keeping an eye on the quickly filling tanks at Cushing, Oklahoma, which the nation’s largest storage facility next to the Strategic Petroleum Reserve.