Oil prices appear to be facing yet another harrowing Monday, with the price of Brent Crude sliding to $19.60 per barrel (5.32pm) yesterday as against $21 last week
This was even as global oil storage is inching closer and closer to full capacity with the problem being exacerbated as more governments across the world extend COVID-19 lockdown recommendations, weighing on crude demand.
According to Goldman Sachs, global oil storage could be completely full within the next three weeks, and another dramatic crash could follow.
Bjornar Tonhaugen, head of oil markets, Rystad Energy also sees storage reaching a critical level in a matter of weeks.
“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,” he explained.
The perfect storm for oil markets has left Brent crude oil prices down 68 percent on the year, while WTI has fallen by 72 percent. The low crude prices have left domestic shale producers fighting for survival.
While once shining-U.S. Shale producer, Whiting Petroleum, was the first company to file for Chapter 11 bankruptcy, it surely won’t be the last, with the shale patch looking particularly vulnerable due in large part to their high breakevens and history of taking on debt.