US crude oil fell nearly 20% in Asia on Monday, its lowest level in more than two decades, due to a drop in global demand as a result of the Covid-19 pandemic. US West Texas Intermediate (WTI) barrel tumbled more than 18.7% to $ 14.84 a unit in early Asian trade, while crude oil from the North Sea fell 1.5%, at $ 27.64 a barrel.
Oil markets have plunged in recent weeks to their lowest level in nearly twenty years, as travel bottlenecks and restrictions around the world are having a severe impact on demand.
Also read: OPEC and partners agree on historic drop in oil production
The crisis was made worse after OPEC member Saudi Arabia launched a price war with Russia, which is not a member of that organization. The two countries put an end to their dispute at the beginning of the month by agreeing, with other countries, to reduce their production of nearly 10 million barrels per day to stimulate the markets touched by the virus.
An over-supplied global market
But prices continued to drop sharply, with analysts saying the cuts would not be enough to offset the massive drops in demand caused by the pandemic. “Crude oil prices have remained under pressure as expectations of falling demand weigh on general sentiment,” bank ANZ said in a note.
“Although OPEC has accepted an unprecedented reduction in production, the market is flooded with oil,” she added. “There is still concern that the storage facilities in the United States may run out of capacity.”
Read again: Oil: $ 19 last night and $ 26 this morning
The US Energy Information Administration said that crude stocks in the world’s largest economy increased by 19.25 million barrels last week, adding to the woes of an oversupplied global market.