By Barani Krishnan
Investing.com - The final vestiges of any support for oil appeared to have vanished, with the market in full lurch towards the $20 per barrel price analysts at Goldman Sachs (NYSE:GS) and elsewhere have warned about.
West Texas Intermediate, the New York-traded benchmark for U.S. crude prices, tumbled $6.50, or 24%, to settle at $20.83 per barrel. The session low was $20.06, the lowest since Feb 2002, when WTI went down to $19.09.
Brent, the London-traded global benchmark for crude, settled down $3.72, or 12%, at $26.69.
Analysts at Goldman on Tuesday forecast that WTI and Brent would both average $20 per barrel in the second quarter — the first time the two have been forecast at parity — with Jeffrey Currie, its global head of commodities research, citing “demand losses across the complex (that) are now unprecedented”.
But some analysts have suggested that crude could go even lower than $20.
“Oil prices not back yet to when I started in this industry,” tweeted Olivier Jakob, founder at Zug, Switzerland-based consultancy Petromatrix.
Abhi Rajendran, director of research at New York-based Energy Intelligence, has said that oil prices in the teens was possible next. “The main driver is for, a week or two, we could have global market oversupply of over 10 million barrels per day (bpd),” said Rajendran, adding that it was “insane and unprecedented”.
Crude prices are headed for historic losses on the year, with WTI down 63% for 2020 and Brent 62%.
Oil is facing a perfect storm of demand destruction caused by the coronavirus pandemic and massive production hikes planned by both Saudi Arabia and Russia in a fight for share of a market increasingly shrinking by the day.
Earlier on Wednesday, the U.S. Energy Information Administration reported that crude stockpiles in the country rose for an eighth-straight week, growing by nearly 2 million barrels last week although by less than the 3.2 million barrels expected by analysts.