US WTI prices plunged by 25%, while Brent dipped below $20/barrel on Monday as investors fled the US benchmark due to limited available storage amid weak demand caused by the coronavirus pandemic. Prices plunged because demand remained weak despite some governments’ efforts to ease movement restrictions to restart the economy.
Data from Kpler showed that worldwide onshore storage was 85% full last week. Meanwhile, crude oil tanks in the WTI delivery hub in Cushing, Oklahoma rose over 6% to around 65 million barrels during the week ended April 24. However, stocks rose by only 0.5% from Tuesday to Friday, indicating either traders found alternative places or producers had cut output.
The United States Oil Fund LP, the largest oil exchange product said that it would not hold short-term contracts, and would prefer later-dated contracts. When WTI slumped below zero last week, USO did not hold any May contracts, but it was still hit hard by the massive price decline. The fund has sold a large part of its June position in the last several days.
The international benchmark Brent crude dropped $1.45 (6.8%) to $19.99/barrel, while US WTI crude futures fell $4.16 (24.6%) to $12.78/barrel. Oil prices have declined in eight of the nine past weeks. The prices ended a three consecutive weeks of decline last week.
