EghtesadOnline: Crude oil futures fell on Monday, with US futures touching levels not seen since 1999, extending weakness on the back of sliding demand and concerns that US storage facilities will soon fill to the brim amid the coronavirus pandemic.
The oil market has been under pressure due to a spate of reports on weak fuel consumption and grim forecasts from the Organization of the Petroleum Exporting Countries and the International Energy Agency, Reuters reported.
The volume of oil held in US storage, especially at Cushing, Oklahoma, the delivery point for the US West Texas Intermediate contract, is rising as refiners throttle back activity due to slumping demand, according to Financial Tribune.
The front-month May WTI contract was down $2.62, or 14%, to $15.65 a barrel. At one point, the contract had fallen as much as 21% to hit a low of $14.47 a barrel, the lowest since March 1999.
That contract expires on Tuesday, and the June contract, which is becoming more actively traded, fell $1.28, or 5.1%, to $23.75 a barrel. Brent was also weaker, down 21 cents, or 0.8%, to $27.87 a barrel.
The plunge in crude oil prices reflects a glut at the main US storage facilities at Cushing and a big drop in demand, said Michael McCarthy, chief market strategist at CMC Markets in Sydney.
“It hasn’t reached capacity but the fear is that it will,” he said, adding that once the maximum capacity is reached, producers will have to cut output.