This first session of the week marks a further drop in crude oil prices, again due to extremely weak demand and strong concerns about storage capacity at this time of the Covid-19 pandemic. We propose you to discover, in this article, all the data of this news and some explanations about the current situation of the oil market.
In the mid-morning of this session on Monday 27th April 2020, we could indeed observe a new strong downward trend for crude oil. Thus, the barrel of American WTI lost 13% at the end of the morning and its price was again under the bar of 15 dollars. For its part, the barrel of North Sea Brent, which is the reference on the international market, also fell, to a lesser extent, with a 3% drop and a price of 21 dollars a barrel.
This further decline in oil prices was to be expected, however, as the price of oil was still suffering from the effects of the containment measures taken by most countries in the world to counter the Covid-19 epidemic. The direct effect of these measures is to drastically reduce automobile traffic, which consumes a lot of the oil produced, and industrial activity. It should also be remembered that during the previous week, the barrel of WTI had broken an all-time record with a price that had fallen below the zero dollar mark for two consecutive sessions.
The upward recovery in prices after this event is therefore more likely to be associated with a technical and strategic rebound than with a real underpricing of black gold.
At the same time and while demand for oil continues to fall, it is the storage facilities, particularly in the United States, that are worrying the markets because they do not have the means to cope with this oversupply.
These concerns about the storage of the barrels produced, which are persistent, have taken precedence over the forthcoming reduction in production in some countries such as Kuwait or Algeria.Indeed, it should be recalled that OPEC had brought together, at the beginning of April, the major oil-producing countries and their partners to agree on a reform of the oil sector.this would mark the end of the price war that had been raging between Russia and Saudi Arabia for several weeks.
The only hope for a recovery in the price of black gold can only come from real progress in the fight against Covid-19 with, in particular, a drop in deaths and contaminations and plans for a partial reopening of the economies of several countries in the world.