Oil rates decrease sharply on Monday, as worries about a blow in demand from the virus pandemic extended to put pressure on investors sentiment. The IEA in its turn said global demand could lower as much as 20M bpd or 20 percent due to the coronavirus outbreak.
The additional pressure came from Saudi Arabia, after declaring on Friday that it was not in discussions with Russia to stabilize oil markets, in accordance with Reuters report. Brent futures tumbled by 8.30 percent, to $22,87 per barrel, the undermost since April of 2003, while U.S. WTI crude eased by 6.74 percent, to $20,35 per barrel at 0904 GMT, the weakest result since March 18th.
Crude oil benchmarks decreased sharply on Monday, as concerns over the virus pandemic taking toll on demand and the Saudi Arabia-Russia price uncertainty jeopardized to glut the market.
Saudi Arabia’s energy ministry representative said on Friday the kingdom was not in discussions with Russia to stabilize markets despite increased pressure from Washington to stop the rates collapse that has decreased prices by more than 60 percent this year.
Experts await world demand to decline by 15M or 20M bpd, a 20 percent decrease from last year, analysts consider deeper supply cuts will be needed besides just the OPEC efforts.
The contango spread between May and November Brent crude futures showed its broadest ever at $13.45 per barrel, while the 6-month spread for WTI crude widened to minus $12.85 per barrel, the largest discount since Feb. 2009.
Prompt rates are more modest than those in future months in a contango market, cheering traders to deposit oil for future sales.
The virus pandemic, with a death toll of about 32,000 people and infected more than 660,000 globally, has brought the worldwide airlines industry to an impasse and put roughly 3B people on lockdown.