As coronavirus pandemic continues to spread its wing across the globe and oppressing global market, price of oil plunged to a 21-year low this week.
The commodity’s latest round of sharp selling comes as uncertainty mounts around storage for excess oil. Demand for crude has plummeted since the coronavirus outbreak has halted tradings.
WTI crude oil plunged as much as 21 per cent to $14.47 per barrel. It later pared losses and traded roughly 15 per cent lower to $15.60 at 9:40 p.m. in New York. Brent crude losses were muted by comparison, with the commodity sliding 4.2 per cent to $26.91 per barrel at intra-session lows.
The price of oil has continued to slide even after OPEC and its allies agreed to the biggest-ever production cut one intended to backstop prices. Investors remain unconvinced the cuts can offset cratering demand for the commodity as the coronavirus keeps society from operating normally.
Concerns around storage come as near-term WTI crude prices trade at large discounts to longer-dated contracts. That dynamic is playing out amid worry that a key storage hub in Cushing, Oklahoma is nearing capacity.
