Oil collapses by another 24% to $20 – It hasn’t been this low since 2002

The nightmare

The coronavirus pandemic has caused global travel to collapse, eating into the world’s once-insatiable thirst for oil, which powers the economy. Countless flights have been canceled. The cruise industry is at a standstill. Highways are empty. And many factories are dark.
At the same time, Russia and Saudi Arabia picked a terrible time to step away from roles as price stabilizers. Russia refused to cut production, in a bid to drown America’s high-cost shale producers in a sea of cheap crude. Saudi Arabia responded by slashing prices and ramping up production — exactly the opposite of what was needed to balance the market. in the oil industry keeps getting worse. It’s now facing the weakest oil price since the first term of President George W. Bush. Intensifying recession fears drove US oil prices down a staggering 24% Wednesday to $20.37 a barrel. That’s the lowest level since February 2002.

Selling escalated throughout the day, with 9% morning losses more than doubling by the afternoon. The acceleration reflects a growing realization of just how much the coronavirus outbreak is slamming the world economy.

The relentless selling is being driven by a crushing combination of excess supply and shrinking demand. And it’s dealing a crushing blow to America’s once-booming oil industry.

Source: CNN

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