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Crude oil prices crashed to their lowest level in about eighteen years on Wednesday as growing worries about an imminent recession due to the coronavirus outbreak raised concerns about global energy demand.
A price war between Russia and Saudi Arabia following disagreement about production cuts in the recent concluded OPEC+ meeting is adding to the woes in the oil market.
West Texas Intermediate Crude oil futures for April ended down $6.58, or 24%, at $20.37 a barrel, the lowest settlement price since February 2002. The contract fell to a low of $20.06 a barrel in the session.
Today's fall is the second biggest single-day drop for crude oil futures, after the about 33% tumble recorded on January 17, 1991.
Brent Crude futures were down by about $4.20, or over 14%, when the contract fell to a low of $24.53 in the session.
On Tuesday, WTI Crude oil futures for April ended down $1.75, or about 6.1%, at $26.95 a barrel, the lowest settlement price since February 2016.
Data released by the Energy Information Administration this morning showed oil inventories in the U.S. rose by 1.9 million barrels in the week ended March 13, compared with expectations for a build of about 3.3 million barrels.
Gasoline inventories were down by 6.2 million barrels, while distillate stockpilesfell by 2.9 million barrels in the week.
The American Petroleum Institute reported on Tueday that crude oil inventories in the U.S. saw a decrease of 421,000 barrels in the week ending March 13.
With major economies going into the lockdown mode, concerns about the outlook for energy demand continue to rise by the day.
"Demand losses across the complex are now unprecedented," said Jeffrey Currie, Goldman's global head of commodities research in a report.
Goldman Sachs sees U.S. West Texas Intermediate crude averaging $20 per barrel in the second quarter with international benchmark Brent crude at $20 per barrel.
Meanwhile, according to reports, the Iraqi Oil Minister, Thamer al-Ghadhban, has asked OPEC's head, Mohammed Barkindo to call an extraordinary meeting of OPEC+ to "discuss all possible ways" to reverse the oil price slide that began after Saudi Arabia announced it was going to start raising production and cutting prices.
