- Brent Crude Drops to $24 Per Barrel
Falling global demand plunged Brent crude oil to $24.01 a barrel on Tuesday following an unprecedented oil market on Monday.
Despite global demand dropping by over 30 million barrels per day, crude inventories continue to rise in the US. Prompting traders of the commodity to abandon their positions as they doubt the 9.7 million barrels per day cuts announced by OPEC+ and the combined 3.7 million barrels per day reduction in oil production announced by the US, Brazil and Canada would be enough to absorbed additional oil production.
“Demand destruction from COVID-19 will see a slower expected reopening of the US economy,” said Edward Moya, senior market analyst at broker OANDA, predicting a weak period for oil prices. “The WTI crude June contract was able to hold the $20 a barrel level and is seeing a modest gain following the painful rollover of the May contract.”
COVID-19 has forced refineries to shut operations, leaving huge oil glut without buyers or logistics to deliver orders.
On Monday, US West Texas Intermediate (WTI) oil plunged to -$37.45 per barrel as traders dumped their May contract out of fear that the oil market may tank before they take physical delivery, especially after data shows the US inventories surged last week.
“Today it’s pretty clear that a major issue in the market is a glut in the US and lack of storage capacity,” said Michael McCarthy, chief market strategist, CMC Market.