Oil continues inexorable slide as COVID-19 global crisis deepens

Oil prices have fallen to their lowest point for over 20 years as demand continues to decline and global storage facilities approach full capacity while most countries remain in lockdown due to the COVID-19 (coronavirus) pandemic.

US crude oil tumbled by almost 20% in early Monday trading to below US$15 per barrel – its lowest point since 1999. The latest price collapse follows a media briefing in the US yesterday, when President Donald Trump claimed that large-scale testing was paving for the way for a partial reopening of the economy.

However, governors labelled Trump ‘delusional’ and said they could not embark on his recommended three-phrase programme to ease lockdown restrictions because the testing regime was still not good enough. Over 40,000 coronavirus-related deaths have been reported in the US.

The historic OPEC+ deal to cut global oil output by 10% agreed last week and news of the reopening of small businesses in Germany has failed to stop the latest slide in oil prices, with most major economies still in shutdown mode.

“[With] oil storage capacity on and offshore close to maximum capacity, one can be sure that the alarm bells are ringing, which means a next Opec+ round is [around] the corner,” said Sebastien Galy, senior macro strategist at Nordea Asset Management.