Oil prices were down on Monday amid signs that global inventories are filing rapidly, with US crude storage nearing a record-high. Investors are worried that worldwide efforts to curb supply will not be fast enough to catch up with the 30% fall in global oil demand caused by the coronavirus pandemic.
Data from the US Energy Information Administration (EIA) showed crude inventories in the country increased to 518.6 million barrels during the week ending April 17, near a record-high of 535 million barrels recorded in 2017. Meanwhile floating crude oil storage has already set a new all-time high of 160 million barrels.
Producers’ efforts to curb supply may not be quick or deep enough to boost prices. Baker Hughes data showed US rig counts were down by 60 last week to 378, the lowest since July 2016, while the total number of rigs in Canada has dropped to the weakest in at least two decades ago.
OPEC+ earlier in April vowed to slash supply by a record of 9.7 million bpd for May and June. According to a report by Bloomberg, Saudi Aramco last week started cutting production from about 12 million bpd to 8.5 million bpd. At the same time, Kuwait and Azerbaijan are coordinating supply curtailment, while Russia is prepared to lower its western seaborne exports by 50% in May.
The international Brent crude LCOc1 lost $1.08, (5.0%) to $20.36/barrel as of 0638 GMT, while US WTI CLc1 futures dropped $2.05 (12.1%) to $14.89/barrel. Traders said prices would likely extend decline as they expected supply to still outstrips demand for coming months due to the economic slowdown caused by the coronavirus pandemic.
