Oil rig closures rising as prices hit 18-year lows

Daniel Fowler
March 30, 2020

Crude oil prices tanked Monday as continued fears over the coronavirus pandemic slammed energy demand.

The shutdown of oil wells has already wiped out nearly 1m barrels a day from global production, but the figure is expected to rise as producers run out of space to store their extra oil as the crisis continues.

Also, with demand being crunched, refiners are already cutting back on crude purchases, no matter how cheap oil is.

As of 1:40 Moscow time [22:40 GMT], the price of May futures for WTI crude oil fell 8.52%, to $19.98 dollars per barrel.

Saudi Arabia said on Friday it was not in talks with Russian Federation to balance oil markets despite rising pressure from Washington to stop a price rout amid the coronavirus pandemic.

With world demand now forecast to plunge 15 million or 20 million barrels per day, a 20% drop from past year, analysts say massive production cuts will be needed beyond just the Organization of the Petroleum Exporting Countries. In response, Saudi Arabia announced that it would ramp up its own production while slashing its oil prices.

"Until we see signs of the pandemic ending, oil prices will stay under presser and could dive below $20 a barrel", he said.

Loss of smell and taste may be symptoms of coronavirus infection
The time from infection to onset of symptoms (incubation period) was five days among all but one patient, the study said. Researchers amassed samples from throat swabs taken from all sufferers on exchange days and analyzed.

In order to generate a sustainable rally, the curve showing the number of new coronavirus cases in the world is going to have to flatten out.

However, after the group dubbed as OPEC+ failed to reach an agreement, oil prices started plummeting.

The price of oil is now so low that it is becoming unprofitable to many oil firms to remain active, analysts said, and higher cost producers will have no choice but to shut production, especially since storage capacities are nearly full.

Dubai-based investment and strategy advice company Hormuz Straits Director Serkan Sahin said the only thing that can be now foreseen in the oil market is the falling demand.

It's not exactly clear yet just how big a hit global oil demand is now taking from the coronavirus, but several analysts, including the International Energy Agency, are pegging it at around 20 million bpd, or roughly 20 per cent of world demand.

Sovereign wealth funds from oil-producing countries mainly in the Middle East and Africa are also on course to dump up to US$225 billion in equities.

The world normally uses 100 million barrels of oil day, but traders and analysts reckon as much as a quarter of that has disappeared in just a few weeks.

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