By Gina Lee
Investing.com - Oil prices slumped on Monday morning in Asia as the pandemic continued to hurt demand while a price war between Saudi Arabia and Russia remained unresolved.
International Brent Oil Futures fell 4.62% to $26.66 by 10:04 PM ET (03:04 AM GMT) and U.S. Crude Oil WTI Futures plunged 5.3% to $20.37.
Demand for oil is expected to shrink 15 million to 20 million barrels per day, Reuters said, as more countries impose and extend lockdowns to curb the spread of the COVID-19 virus.
Meanwhile, neither Saudi Arabia nor Russia showed any signs of backing down from increasing supply amid an ongoing price war. A delegate told Bloomberg that OPEC nations, Saudi Arabia amongst them, are opposed convening an emergency panel on tanking prices.
Lachlan Shaw, National Australia Bank’s head of commodities research, told CNBC, “OPEC, Saudi Arabia and Russia could mend their differences, but there’s not that much OPEC could do....The demand shock from COVID-19 is just too big. The reality is global storages will fill up in a couple of months if nothing changes, and that will have all sorts of disruptive impacts on pricing.”
Vivek Dhar, commodities analyst at Commonwealth Bank of Australia, agreed as he told Bloomberg, “Demand concerns are critical but well known, what really took the market down were the signals we got from Saudi Arabia and Russia that they intend to continue their current path. Market hopes of a deal have come undone.”
"From a physical point of view, it’s really bleak,” Shaw added. “You need a strong signal to tell suppliers this is a pretty diabolical situation.”