The oil market ends the first quarter of 2020 with the biggest price losses in history. The first quarter witnessed high volatility in oil prices as the coronavirus pandemic froze the global economy. At the same time, Saudi Arabia and Russia waged an oil price war, threatening the already-oversupplied market with more glut.
The international Brent crude futures LCOc1 lost 2 cents lower to $22.74/barrel on Tuesday. The futures tumbled by 66% in Q1 and by 55% in March. This marked the most significant quarterly and monthly percentage loss in history.
Meanwhile, US WTI CLc1 gained 39 cents to $20.48/barrel on Tuesday. The US benchmark slumped by 54% last month and 66% last quarter. These are the worst monthly and quarterly declines since the contract’s introduction in 1983.
The coronavirus pandemic has driven oil prices off a cliff since the beginning of this year. Physical crude oil prices have fallen further than the benchmark futures in many key markets in Europe, the US, Canada, and Mexico, a worrying sign that oil demand might soon collapse and strand barrels of crude.
Oil producers are expected to cut output soon. Data from the US Energy Information Administration showed US oil production fell from 12.8 million bpd in December to 12.7 million bpd in January. Goldman Sachs projected the US crude output to decline by about 1.4 million bpd in Q3 2021 to cope with dwindling demand.
