Oil losses increased on Monday, while price war continues among top producers. Meanwhile global financial markets are in panic due to the rapid spread of coronavirus.
Brent crude fell $1.13 to $32.72 a barrel by 0230 GMT, falling after last week’s plunge of 25%. Meaning the largest weekly tumble since 2008. The front-month price opened at a high of $35.84 but slipped to a low of $31.63.
Despite the U.S. commitment to fill strategic oil reserves, the world’s largest oil consumer, U.S. crude was at $31.01, down 72 cents after slipping below $30 earlier in the session,
The US Fed lowered interest rates on Sunday and said it would increase its balance sheet by at least $ 700 billion in the coming weeks to ease tensions in the financial markets.
Oil prices are under intense pressure both on demand and supply side. While concerns about the virus outbreak that reduced oil demand continued, Saudi Arabia, the top oil exporting country, increased production, and fear of excessive supply in prices increased.
Despite the large drop in both oil and natural gas prices last week, the number of U.S. oil drilling rigs has increased for the second consecutive week since December.
Nevertheless, the number of rigs is expected to drop as producers deepen spending cuts for new drillings.
US manufacturers will feel more pain as margine between the Brent and WTI has approached its narrowest level since 2016. Shale possibly may have the most of the damage. Particularly costly shale producers may need a rescue operation by the US government.
Despite the fact that these things make the US crude oil unrivaled in international markets, it is stated that exports will decrease by 1 million barrels per day in April and May.