The price of oil fell to its lowest for two decades in the US this morning as demand continues to dry up amid the coronavirus pandemic.
West Texas Intermediate — the US oil benchmark — fell by about 20 per cent to $14.47 (£11.62) a barrel in early trading today (April 20), marking its lowest price tag since 1999.
It has since rallied slightly, falling nearly 18 per cent to $15.04 (£12.08).
The global oil industry is facing a sharp drop in demand as countries across the globe are on lockdown to tackle the coronavirus crisis, limiting both domestic and international travel.
Brent crude, the international oil benchmark, has fallen 62 per cent over the past year, down 2.2 per cent this morning, while WTI has seen more than three quarters (76 per cent) wiped from its price in the past 12 months.
Oil prices were hurt further earlier this year by an excess of supply from the price war between Saudi Arabia and Russia. In March Russia broke its partnership with Opec, prompting Saudi Arabia to launch an aggressive price war targeting the rival producer by ramping up production and offering big discounts.
However there were hopes of an end to the price war at the beginning of April and today’s fall comes despite an Opec-backed deal to cut supply by about 10 per cent.
Markets have been resilient to the news this morning, with S&P 500 futures down less than 1 per cent (0.47 per cent) and the UK’s blue chip index slightly up (0.25 per cent) since opening today.
The Nikkei 225 slipped 1.15 per cent overnight however while Australia’s S&P/ASX 200 fell 2.45 per cent.
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