InvestorQ : Why have crude prices fallen again so sharply on 20 April? Could we see oil touching $10/bbl in the near future?
Khushi Patel made post

Why have crude prices fallen again so sharply on 20 April? Could we see oil touching $10/bbl in the near future?

Answer
user profile image
Anjana Aiyar answered.
6 months ago


The sharp fall on Monday was more on US WTI crude while the Brent is still much higher at around $26/bbl. US WTI crude crashed to below $15 a barrel on Monday, which is the lowest level since 1999. Currently, oil is down on concerns about a virus-triggered demand shock. In addition, the lack of storage facilities has also eclipsed an output cut deal. West Texas Intermediate (WTI), the US benchmark, fell more than 19% to $14.73 a barrel before markets steadied. At the same time, the North Sea benchmark Brent crude also dropped 4% to $26.93 a barrel, before stabilising. Oil prices have plunged in recent weeks after lockdowns and travel restrictions battered demand for crude oil. With flights, trains and cars off the road, and factories largely shut, there is no demand for oil. The situation only got aggravated after Saudi Arabia opted to launch an all-out price war with non-OPEC member Russia. Ultimately, there was a truce with both Riyadh and Moscow agreeing to cut output by up to 10 million bpd, but it has been too little too late. If the Coronavirus issue lingers and the shutdown continues then the level of $10/bbl on WTI crude is not too far away.