U.S. crude futures plunge over 40% to 1986 low
Supply-demand imbalance hits prices
- Oil prices tumbled, with the U.S. crude futures contract plunging more than 40% to its lowest level since 1986, as investors worried about lack of storage and German and Japanese data indicated a bleak global economy.
- Brent was down $1.56, or 5.6%, to $26.52 a barrel by 8.50 p.m. (IST) while the front-month May WTI contract fell $8.16, or 44.7%, to $10.11 a barrel.
- Prices have been pressured for weeks since with the COVID-19 outbreak, hammering demand even as Saudi Arabia and Russia failed to reach an agreement to cut supply.
- The two sides, with U.S. urging, agreed more than a week ago to cut supply by 9.7 million bpd, but that will not quickly reduce the global glut.
- Brent oil prices have collapsed around 60% since the start of the year, while U.S. crude futures have fallen more than 80%, to levels well below break-even costs necessary for many shale drillers.
- U.S. crude futures hit a low of $10.01 a barrel, the lowest since 1986. Analysts said the sell-off was exaggerated by the contract's imminent expiry.