Oil prices drop to 21-year low as demand crises persist

There appears to be no respite in sight for oil producers, as the volatility and continuous price slump in the global oil market continue.

Investigations have confirmed that crude oil prices extended its slide, crashing to its lowest in over two decades due to a terrible combination of very low global demands and concerns that global storage facilities are rapidly running out.

The present circumstances in the global oil market indicate that the output cut deal between OPEC+ and other top oil-producing countries has proven insufficient to take care of declining oil demand.

It should be noted that the June delivery for WTI declined to $23.69 per barrel, while that for Brent crude declined to $27.83 per barrel.

According to a report by Bloomberg, an analyst, David lennox, said, “The output cut that we’ve seen, or supposed to see coming, isn’t sufficient to cover the 25 million to 30 million barrels of daily demand that’s being destroyed by covid-19.”

The oil price crash is still sending shockwaves throughout the industry, even as oil majors have begun reviewing all their existing contracts with their vendors and contractors downward. They had to slash their expenditure across the board.

The negative impact of volatility of the market has seen Exxon Mobil, which was the most valuable company in US as of 2013, reduce in worth to just about 13% as much as Apple and Microsoft. A recent report shows that streaming giant, Netflix is now more valuable than the firm.

In the meantime, there are indications that the International Energy Agency (IEA) is considering the option of paying producers to keep crude oil in the ground. This is expected to take care of the problem of scarce storage facilities.