Iran Press/ America: Futures in New York fell 15% to less than $16 a barrel after losing almost a fifth of their value last week as the deal by OPEC+ and other producers failed to counter the demand hit from a crippled global economy.
The current May contract expires Tuesday, however, with the more active June futures falling by around a third as much on more than five times as much trading volume.
Near-term prices for West Texas Intermediate, the U.S. benchmark, are trading at huge discounts to later-dated contracts on concern the storage hub of Cushing, Oklahoma, will fill to capacity. That has seen prices disconnect from Brent futures in London.
Buyers in Texas are offering as little as $2 a barrel for some oil streams, raising the possibility that American producers may soon have to pay customers to take crude off their hands.
The 9.7 million barrels a day of production cuts agreed by OPEC+ are paling in comparison against this backdrop. China reported its first economic contraction in decades on Friday, an indicator of what’s to come in Europe and North America, which have yet to emerge from coronavirus-driven lock-downs.
There were some signs of optimism, however, as death rates eased in New York and some of the hardest-hit European countries.
Brent for June delivery fell 1.6% to $27.63 a barrel on the ICE Futures Europe exchange after losing 10.8% last week.
WTI for May delivery fell 15% to $15.54 a barrel on the New York Mercantile Exchange as of 10:25 a.m. in Singapore after plummeting 20% last week. It dropped to as low as $14.47, the weakest since March 1999. The June contact declined 5.4% to $23.69.
"The current prices show that the OPEC+ cuts proved to be a blip, with oil prices at the mercy of the virus once again," said Vandana Hari, founder of Vanda Insights in Singapore. "Until we approach a lifting of the lockdowns in the U.S,, oil may drift lower or remain range bound around current levels."
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