Oil prices fell below $30 per barrel on Tuesday, extending losses after shedding a tenth of their value on Monday, as the coronavirus pandemic hit demand while Saudi Arabia raised output to a record as it battles with Russian Federation for market share.
"What we are seeing here is essentially the atomic bomb equivalent in the oil markets", said Louise Dickson, an analyst at Rystad Energy A/S, in an email.
On Monday, Saudi Aramco said it is likely to sustain higher oil output planned for April in May, and that it was "very comfortable" with $30 a barrel price, signalling the state oil company is prepared to live with low prices for a while.
The world's biggest exporter said it would free up an additional 250,000 bpd of oil for exports by using gas for domestic consumption.
West Texas Intermediate futures in NY fell as much as 12% to US$23.60 a barrel, the lowest since June 2002.
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Futures in London traded down 1.8% after earlier rising as much as 4%, as measures by governments to restrict travel hammered fuel consumption and led to the biggest daily decline in USA gasoline prices since 2005. Demand is in free fall, with some traders saying it could be dropping by more than 10% compared to past year.
At that level Brent would be at its lowest since February 2002.
The coronavirus outbreak, which has infected at least 174,000 people and killed around 6,700, already has caused oil prices to plummet by 50% since the start of the year.
"Physical markets are virtually bidless", said Scott Shelton, energy salesperson from United ICAP.
The market is finding little succor in global efforts to stem the economic fallout.
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It will take off from Wellington and Christchurch for Australia just twice a week; to Sydney. You can read Qantas' press release from Tuesday over at the Qantas website .
The International Energy Agency said on March 9 it expected oil demand to be 99.9 million barrels per day (bpd) in 2020, lowering its annual forecast by nearly 1 million bpd and signaling a contraction of 90,000 bpd, the first time demand will have fallen since 2009.
"On the demand side we expect 1H20 global oil consumption to contract by over 0.5mn b/d and see risk that this spills over into 2H20 if the coronavirus is not contained", BoA said in a note to clients.
The kingdom is now preparing budget scenarios in which crude prices could drop as low as $12-$20 per barrel, according to the Energy Intelligence Group.
The turmoil in oil is being played out across financial markets , with Wall Street stocks suffering their biggest plunge since 1987 on Monday after President Donald Trump warned of a possible recession. Before OPEC+ talks collapsed earlier this month, Iraq had routinely disregarded the supply cutbacks it had promised.
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