Oil Futures Drop To 1999 Levels With Demand Falling, US Storage Scarce

Oil futures dropped to 1999 levels due to falling demand caused by the coronavirus pandemic and increasing worries that the United States is running out of storage.

On Monday, WTI futures fell by as much as 15%, touching less than $16 a barrel, as a deal between OPEC+ and other producers failed to counter the lackluster demand triggered by the coronavirus pandemic.

The May WTI contract, which expires Tuesday, at one point reached $14.47 per barrel, a price not seen since 1999. 

The June contract, which is more widely traded, fell 5.1% to $23.57 a barrel. Meanwhile, Brent was down by nearly 1%.

The near-term prices for WTI are trading at substantial discounts to later-dated contracts due to worries that the U.S. storage hub of Cushing, Oklahoma will reach capacity, according to Bloomberg. 

The drop in crude futures is an indicator that there is a mismatch between demand and supply, according to Reuters.

Production cuts from OPEC and Russia are scheduled to begin in May.

The demand in fuel has declined 30% on a global basis.

Oil Price Action

At the time of publication Monday, WTI futures traded 15.44% lower at $15.45 per barrel in New York, while Brent futures traded 0.71% lower at $27.88 at ICE Europe.