Oil prices dropped yesterday as governments’ escalated lockdowns to curb the spread of the global Coronavirus outbreak that has slashed the demand outlook for oil and threatened a global economic contraction.
Brent crude futures fell $1.09, or 4 percent, to $25.89 a barrel while West Texas Intermediate, WTI, crude futures were down 15 cents, or 0.7 percent, at $22.48 a barrel.
Oil prices have fallen for four straight weeks and have given up about 60 percent since the start of the year. Prices of everything from coal to copper have also been hit by the crisis, while markets in bonds and stocks enter rarely charted territory.
The coronavirus, which has infected more than 325,000 and killed over 14,000 worldwide, has disrupted business, travel and daily life. Many oil companies have rushed to cut spending and some producers have already begun putting employees on furlough.
The market has had to contend with the twin shocks of the demand destruction caused by the coronavirus pandemic and the unexpected oil price war that erupted between producers Russia and Saudi Arabia earlier this month.
“We believe oil prices will continue to fall into the teens in the short term amid disaster demand destruction, building global stocks and no production limits after April 1,” said Joseph McMonigle, senior energy policy analyst at Hedgeye Potomac Research, in a note.
Almost a third of Americans are now under orders to stay at home as states took extra measures to stem the rising numbers of cases in the world’s biggest economy, while in New Zealand Prime Minister Jacinda Adern said all non-essential services and businesses are to be shut down.