Oil prices on Monday posted further losses after prices for WTI and Brent rose towards the end of last week. Monday saw U.S. oil futures post a loss of almost 25 per cent and Brent fell below the US$$20 mark as worries over storage and lack of demand continued.
Rystad Energy’s head of Oil Markets Bjornar Tonhaugen said: "It is only natural that prices are dropping if we look at the market forces. And they will remain under downwards pressure until we see significant upstream shut-in volumes actually commence. The storage facilities. They are filling by the day and they won’t stop to do so, as the gap between supply and demand is still humongous."
He added: "Neither an earlier start of production curtailments by Saudi Aramco and Kuwait Petroleum Corporation, nor a historically large 500,000 bpd monthly US oil production decline in May-June will remove enough oil supply to avoid filling the world’s crude storage during May."
Tonhaugen believes that "the market knows that the storage problem remains and we are on a calculated path to reach tank tops in weeks. Prices can’t do else but decline when producers won’t have where to store oil soon. Intentions to help prices further, announced by many OPEC+ and non-OPEC countries, are not enough to alter the current situation. Actions are needed now as the problem stopped being theoretical and far away. The storage clock is ticking for producers and we are approaching the final countdown if no further action is taken."