US Crude West Texas Intermediate Sinks to $11

By Adedapo Adesanya

The United States crude oil benchmark futures, West Texas Intermediate (WTI), fell below $12 on Monday afternoon as huge decline in demand for crude and possibility of global storage filling up in a few weeks continue to affect oil prices, bringing them to their lowest since 1998.

On Monday afternoon, the WTI depreciated by more than 38 percent to sell at $11.26 per barrel. On its part, the Brent crude was down by 6.3 percent or $1.76 to $26.32 per barrel.

Primarily caused by the coronavirus pandemic, that is seriously pulling down the need for the commodity, US oil is facing a plunge in price in over 20 years and the Department of Energy is even considering paying domestic oil producers to stop producing as they are running at a loss with current level of price.

Even as demand is dropping, storage facilities in the US are now struggling to cope with the glut of oil, weakening prices further as seen with current circumstances. Land storage is being filled up and even ships that carry oil are also filling up by the day.

Earlier this month, members of the Organisation of the Petroleum Exporting Countries (OPEC) and their allies finally agreed a record deal to slash global output by about 10 percent, but the market’s reaction proved that the cut was not big enough to make a difference

The deal, despite being the largest cut in oil production ever to have been agreed by oil producers, is keeping prices from rising.

The oil price collapse is affecting the entire industry, with oil majors slashing spending across the board, and explorers cutting as much as 13 percent of their drilling fleet as the crisis rages on.

This might even force the hand of the Texas Railroad Commission to consider a state-wide production cut, something that has proven unthinkable till current situation.

While the three commissioners were unable to come to a decision last Tuesday, the group is set to meet again on Tuesday, April 21.

And with oil prices having fallen close to 40 percent since their last meeting, they might just be ready to take action.