On Monday, crude oil futures slid following the contractions posted last week as demand outlook is still clouded by the coronavirus pandemic and Saudi Arabia-Russia oil price war.
Brent crude oil futures slumped by 5.6% or USD1.40 to USD23.53/barrel. US WTI also tumbled by 5.2% to USD20.39/barrel after reaching a low of USD19.92/barrel in the early trading.
The oil market share war between Saudi and Russia has flattened the OPEC+ oil production cuts and analyst Lachlan Shaw of National Australia Bank opined that at the moment, there is not much OPEC could do even if the differences between producers are solved, as the demand shock from the pandemic is too big.
Shaw opined that if there are no changes in the next couple of months, global storages would fill up and pricings will face all sorts of disruptive impacts.
Demand is now expected to fall by 15-20 million bpd or 20% from 2019 and the US rig count has fallen by the most since 2015 by 40 units as firms sharply cut spendings. US oil production is at 13 million bpd but could fall by more than 1.4 million bpd by the end of 2021’s third quarter.
