Crude oil benchmarks slumped at the open of electronic trading yesterday, extending last week’s losses as the global COVID-19 pandemic worsened and the Saudi Arabia-Russia price war continued unabated.
In early trading, Brent futures fell 7.1 per cent to $23.15 a barrel, while US crude futures lost 5.6 per cent, or $1.17, to $20.34 a barrel.
The oil markets are enduring a twin shock of demand destruction caused by the COVID-19 pandemic and the Saudi-Russia price war that is flooding markets with extra supply.
Despite this, Saudi Arabia and Russia remain at loggerheads. Russian oil companies have said they expect the price war to continue, while the Saudis have not given any indication that there are new talks coming to curb supply.
They anticipated a fall of nearly 19 million bpd in global oil demand in April.
In recent days prices for crude oil traded at key locales such as Midland, Texas, have traded at several dollars less than US futures, an indication that companies there are anticipating a flood of supply.
U.S. oil production is currently running at roughly 13 million barrels per day, a record, but is expected to drop by more than 1.4 million bpd by the end of the third quarter 2021.