A full oil glut has fit the international Crude Oil market as prices have plunged to a record low of $2 per barrel.
The effects of the Coronavirus on global economies has erased global demand for the commodity with buyers in Texas pricing the commodity for as low as $2 from $5.
An oil glut hit the Oil market as economies have shut down and thousands of jobs as well as billions in capital have been lost in the sector.
There is a current oversupply of crude oil on the international market with no off-takers for billions of barrels floating on the sea.
The last minute efforts of Oil Producing countries to cut down on production seems to be coming a little too late as global demand has fallen to one third of what it used to be before the Coronavirus pandemic.
According to a report by Bloomberg, a technicality accelerated the crash of crude oil prices on Monday as traders avoided the futures contract for May which expires tomorrow; driving prices down by a further 78 percent since futures started trading on the New York stock exchange in 1983.
According to the managing director of global energy strategy at RBC Capital Markets, Michael Tran;
“There is little to prevent the physical market from the further acute downside path over the near term.
Refiners are rejecting barrels at a historic pace and with U.S. storage levels sprinting to the brim, market forces will inflict further pain until either we hit rock bottom, or COVID clears, whichever comes first, but it looks like the former.”
Global Oil prices have fallen by more than 90% since the start of the Coronavirus pandemic, exacerbated by OPEC’s disagreement with Russia which led to an extreme price crash.
Crude Oil producers with little storage capacity are desperately trying to offload their cargoes even as demand drops with the closure of the global economy.