Oil prices slumped again on Wednesday, with Brent falling to rock bottom since 1999, because the market struggled with a huge crude glut amid a collapse in demand for everything from gasoline to jet fuel caused by the coronavirus outbreak.
Brent crude LCOc1, which fell 24 per cent within the previous session, touched $15.98 a barrel, its lowest since June 1999. it had been trading down $2.37, or 12 per cent, at $16.96 at 0511 GMT.
West Texas Intermediate CLc1 was down 51 cents, or 4.4 per cent, at $11.06 a barrel.
The falls follow two of the wildest days within the history of oil trading, as worldwide supply looks set to overwhelm demand for months to return and current production cuts fall far in need of offsetting that glut.
The front-month US contract fell into negative territory for the primary time in history on Monday and set a record for the amount of contracts traded on Tuesday.
Oil prices have slumped by around 80 per cent this year because the pandemic has spread across the planet , killing almost 180,000 people, routing financial markets and resulting in what might be the worst economic meltdown since Depression of the 1930s.
The viral outbreak has caused fuel demand to drop in roughly 30% worldwide and energy companies within the us , the world’s biggest producer, are scrambling to seek out storage for excess oil.
“This may be a direct results of excessive investment coinciding with a sudden demand shock during a landlocked area with limited storage and transportation,” Goldman Sachs said during a report.
The volatility within the oil market has prompted CME Group, the world’s biggest commodities exchange, to boost margins on petroleum futures.
The United States Senate on Tuesday approved nearly $500 billion in added support for the US economy and hospitals and can send the measure to the House of Representatives for final passage later in the week .
But there's concern globally that no amount of pump priming are going to be enough, with business executives preparing for a protracted slump in demand and lots of of them worried that their companies won’t survive.
US crude inventories rose by 13.2 million barrels within the week to April 17 to 500 million barrels, data from industry group the American Petroleum Institute showed on Tuesday. Analysts had expected a build of 13.1 million barrels.
Official government data is thanks to be released on Wednesday.
“The US oil system has been shattered bydemand destruction never seen before,” said Matt Stanley, a fuel broker at Star Fuels in Dubai.
The us House of Representatives is about to vote on what would be the fourth coronavirus-response law. Taken together, the four measures amount to about $3 trillion in aid since last month to confront a crisis that has killed nearly 45,000 Americans.