Oil Prices Fall Sharply as Coronavirus Darkens Demand Outlook

Oil prices fell sharply today, with crude oil near an 18 year low and Brent hitting its lowest since November 2002, as the global coronavirus pandemic worsens and the Saudi Arabia-Russia price war shows no signs of abating.

U.S. West Texas Intermediate (WTI) crude futures fell as far as $19.92, near an 18-year low hit earlier this month, and was last trading down 3.77%, or $20.70 a barrel.

Brent futures were down 6.7%, or $1.68, to $23.25 a barrel, after dropping earlier to $23.03, the lowest since November 2002.

International crude oil analyst Osama Rizvi stated that oil prices are taking a beating once again:

As we have discussed before, prices will continue to remain under pressure. Russia hinted, last week, about a possible deal with OPEC but later on authorities from Saudi Arabia said that they are still going ahead with their plans to increase production. This shows nothing can be expected in the short term except for the fact that prices will drop further from the level they are right now.

The oil markets have been slammed by demand destruction caused by the coronavirus pandemic and the Saudi Arabia-Russia price war that is flooding markets with extra supply.

Saudi Arabia said on Friday that it was not in talks with Russia to balance oil markets despite rising pressure from Washington to stop a price rout amid the coronavirus pandemic. A senior Russian official had said that a larger number of oil producers could cooperate with OPEC and Russia to support prices.

With the demand now forecasted to plunge to 15 million or 20 million barrels per day, a 20% drop from last year, analysts say massive production cuts will be needed beyond just the Organization of the Petroleum Exporting Countries (OPEC).

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