Concomitantly, as a number of export-oriented and highly industrialized country had imposed a sweeping lockdown of factories and businesses amid frets of coronavirus outbreak, crude oil demand concerns in a short- to intermediate-term outlook appeared to be tinkering with investors' nerve.
The oil market could see a record supply surplus in April as coronavirus wipes out demand and big producers pump more, creating a global glut that threatens to overwhelm storage capacity within months and force widespread industry shutdowns, analysts said on Wednesday.
Oil prices plunged below $25 a barrel for the first time in nearly 18 years after Saudi Arabia made another shock-and-awe attack in its price war with Russian Federation, vowing to keep production at a record high "over the coming months".
"We're now seeing both Brent and WTI prices closing in on their 2016 lows, which could well open a move to levels last seen in 2003, down towards $20 a barrel which, if sustained, is likely to be enormously painful for some USA shale producers, as well as the Gulf states".
Crude prices have posted sharp losses at the start of the week.
Aramco is "very comfortable" with the price of crude sitting at $30 a barrel, according to CFO Khalid al-Dabbagh, reports Reuters. "What is coming will be twice that or more", said Jim Burkhard, vice president and head of oil markets at IHS Markit. Measures to support the economy taken by governments and Central banks of different countries are not keeping pace with development of the crisis caused by the pandemic coronavirus.
The US Federal Reserve cut its target range for interest rates to near zero on Sunday in the second emergency cut this month, saying it would raise its budget by at least $700 billion in the coming weeks in an attempt to ease tensions in the financial markets. The worldwide benchmark fell 4.3 percent on Tuesday. USA crude output has grown in recent years to almost 13 million bpd, making it the world's largest producer. "With each day there seems to be yet another trap door lying beneath oil prices, and we expect to see prices continue to roil until a cost equilibrium is reached and production is shut in".
WTI and Brent crude are on pace for their worst month ever, each down 45%.
Some major oil consuming nations like the United States and India have tried to take advantage of low oil prices and bulk their its strategic stockpiles. However, the purchases are not seen as likely to offset the drop in demand nor the increase in supply, Energy Aspects said in a note.
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