Crude oil prices continue to slide downwards, falling below $15 which is the lowest since 1999 as traders worry over the slump in demand due to COVID-19.
Analysts are of the view that countries are quickly running out of storage for crude after output cuts proved insufficient to counterbalance the COVID-19 related drop in demand.
At the time of filing this report, prices on the May contract for West Texas Intermediate crude futures dropped by almost 20% or $3.97 to $14.30 per barrel during the intraday trading. According to Refiniti, the futures contract is set to expire on Tuesday. Brent crude oil was down by 3.35% or $0.95 to $27.07. Whereas the June WTI contract fell by more than 7% to $23.27.
A.A.H Soomro, managing director at Khadim Ali Shah Bukhari Securities says that the demand contraction is keeping the oil slippery along with topped up storage capacities around the world. He added that the resumption of economic activities should bring oil prices up after a few tough weeks.
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International crude oil analyst Osama Rizvi anticipates further bearishness in the markets because he thinks, “We are out of ammunition.”
He stated that central banks have reduced interest rates and OPEC+ had their deal last week, both of them didn’t work.
“There is a limit to what producers can cut. The only solution to this is demand, which I don’t see picking up in the near future,” added Osama.
