US oil slides be­low $15 on stor­age wor­ries

Kuwait Times - - Business -

SIN­GA­PORE: US oil prices fell heav­ily yes­ter­day and slipped be­low $15 a bar­rel on re­newed stor­age con­cerns as the coro­n­avirus throt­tles de­mand, even as pro­duc­ers start slash­ing out­put to boost mar­kets. Amer­i­can bench­mark West Texas In­ter­me­di­ate dropped 15 per­cent to $14.39 a bar­rel in Asian af­ter­noon trade, re­vers­ing di­rec­tion af­ter sev­eral days of gains last week.

Brent crude, the in­ter­na­tional bench­mark, was off nearly six per­cent at $20.16 a bar­rel. Oil prices have col­lapsed in re­cent weeks as de­mand evap­o­rated be­cause of lock­downs and travel re­stric­tions im­posed world­wide to fight the virus. Last week, US oil fell be­low zero for the first time as in­vestors scram­bled to off­load it be­fore the ex­piry of a trad­ing con­tract, but could not read­ily find buy­ers.

Prices have re­cov­ered since, but re­main at their low­est lev­els for years. A key worry for traders is that stor­age fa­cil­i­ties­par­tic­u­larly in the United States-can­not cope with the over­sup­ply. “Con­cerns sur­round­ing ris­ing global in­ven­to­ries, es­pe­cially in the US with the coro­n­avirus pan­demic weigh­ing on gaso­line con­sump­tion, are pres­sur­ing oil prices,” said Kim Kwan­grae, a com­modi­ties an­a­lyst at Sam­sung Fu­tures Inc.

The over­sup­ply could test stor­age ca­pac­ity lim­its in three to four weeks as tanks fill up, Gold­man Sachs warned in a re­port. The con­tin­ued con­cerns about stor­age over­shad­owed signs that some coun­tries-in­clud­ing Kuwait and Al­ge­ria-are start­ing to slash pro­duc­tion in line with a ma­jor agree­ment ham­mered out this month.

Top pro­duc­ers have agreed to re­duce out­put by 10 mil­lion bar­rels a day from May to shore up mar­kets, a deal that marked an end to a price war be­tween Rus­sia and Saudi Ara­bia.

— AFP

A view of the Marathon Petroleum Corp’s Los An­ge­les Re­fin­ery in Car­son.

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