MarketDeal24.Com – The prices of crude oil has dipped sharply on Monday, the first trading day of the week, with US WTI plunging below $20 for a brief time period and the global benchmark, Brent hitting its lowest in the year of 2002 on increased fears that the global economic slowdown could last for months to come.
Brent crude, the London based international benchmark for the crude prices, was down $1.93, or 7.7% at $23.00 per barrel. U.S. West Texas Intermediate (WTI) crude, on the other hand, dipped $1.14, or 5.3%, to $20.37 per barrel.
The monetary value of the crude is so low that it is becoming virtually impossible to eke out profit, experts say. And high cost producers will have no option but to halt production.
“World demand for crude is fading away on the back of COVID-19-related travel restrictions and social distancing measures,” said Swiss National Bank analyst Tareq Aziz.
Besides demand destruction caused by the coronavirus outbreak, the oil markets have also been slammed by the Saudi Arabia-Russia price war that is flooding markets with extra supply.
A top official from Saudi Arabia’s energy ministry said on the condition of annonimity on Friday the kingdom was not in negotiations with Russia to balance oil markets despite rising pressure from the Trump administration to stop the rout that has slashed prices by more than 60% this year.