Oil Price Plunges to $15 Amid Rising Glut

• Oil Price Plunges to $15 Amid Rising Glut

Oil price declined to a 20-year low during Asian trading session on Monday as concerns over rising global glut and corporate earnings due this week weighs on market expectations.

Efforts by governments to curtail the spread of COVID-19 have erased demand for crude oil, especially after many refineries shut down operations in a bid to abide by lockdown rules.

US West Texas Intermediate crude oil declined by 15 percent to $15.54 per barrel on Monday, while Brent crude, against which Nigerian oil is measured, declined slightly to $27.83 a barrel.

“Over the last month, the total number of active oil rigs in the US has fallen by more than 35 percent, highlighting the impact that the current low oil price is having on drilling activity. This drilling slowdown will translate into lower production in the coming months,” said Dutch investment firm ING’s commodities strategists, Warren Patterson and Wenyu Yao.

However, data from the U.S. Energy Information Administration showed oil inventory increased by 19.2 million barrels in the week ended April 10. While the International Energy Agency (IEA) on Wednesday predicted a 29 million barrel per day (bpd) decline in demand in April.

“There is no feasible agreement that could cut supply by enough to offset such near-term demand losses,” the IEA said in its monthly report. “However, the past week’s achievements are a solid start.”

Also, traders are worried that earnings report due this week would likely highlight the degree of damage done to global economy and may plunge prices below the current level.

The total number of US deaths rose above 40,000 on Sunday with more than 700,000 people infected. The Federal Reserve’s debt purchasing program jumped to $6 trillion from $4 trillion recorded post-2008 crisis despite near-zero interest rates.

However, with unemployment claims now at a record 22 million, the world’s largest economy may face a complex economic situation post-pandemic. The complexity of the situation continues to cloud investors’ projection and pushed risks to a record-high.