Crude oil benchmarks fell sharply on Monday, and Brent reached its lowest level since November 2002. The oil market faced the threat of market overload as a result of the coronavirus pandemic lowering demand and the Saudi Arabian-Russian price war.
Brent futures LCOc1 were down 5.8%, or $1.45, to $23.48 a barrel as of 0623 GMT, after earlier dropping to $23.03, the lowest since November 2002.
West Texas Intermediate (WTI) crude futures CLc1 fell as far as $19.92, near an 18-year low hit earlier this month, and was last trading down 3.8%, or $0.82, at $20.69 a barrel.
Central banks are loosening their monetary policy and governments are offering stimulus packages, but these are thought to be supportive measures, not radical treatments.
Oil prices will remain under pressure until the end of the outbreak, and the barrel is said to drop below $ 20, and the next support level of WTI crude oil may be around $ 17.
Asian stocks also fell on Monday, despite central banks’ efforts to support the markets with price reductions and asset purchase campaigns.
World demand is forecast to drop 15 million or 20 million barrels a day today, down 20% last year. Analysts say it is not sufficient that only the Organization of the Petroleum Exporting Countries (OPEC) maintain the production cuts, beyond that, large production cuts will be needed.
The contango spread between May and November Brent crude futures reached its widest ever at $13.45 a barrel, while the six-month spread for U.S. crude broadened to minus $12.85 a barrel, the widest discount since February 2009.
Prompt prices in the contango market are lower than in the coming months, encouraging traders to store oil for future sales.