U.S. oil prices tumbled to their lowest level in more than 20 years on Monday, with crude storage facilities filling rapidly.
The May contract of U.S. West Texas Intermediate futures fell to $14.32 a barrel on Monday, down more than 21%. That's its lowest level since March 1999.
Oil field workers with Wisco work on a pump jack in North Dakota, the United States, on November 6, 2013.U.S. oil prices tumbled to their lowest level in more than 20 years on Monday, with crude storage facilities filling rapidly as the coronavirus pandemic continues to crush demand. futures fell to $14.32 a barrel on Monday, down more than 21%. That's its lowest level since March 1999.
"The current forward crude oil curves for Brent and WTI are now in very deep contango, but the contango is also very front-loaded," Bjarne Schieldrop, chief commodities analyst at SEB, told CNBC via email. In the second half the year, he continued, the problem of storage capacity should "vanish rapidly" because oil demand is expected to rebound strongly, while inventories will draw down sharply. "This is why the Brent crude average oil price for 2021 is holding up so well at $40 a barrel," Schieldrop added.that the coronavirus shock was "extremely negative for oil prices and is sending landlocked crude prices into negative territory.
The Covid-19 outbreak has meant countries have effectively had to shut down, with many governments imposing restrictive measures on the daily lives of billions of people. It has created an unprecedented demand shock in energy markets, with storage space – both onshore and offshore – quickly filling up.
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