İrem UZUN -TDO- The price of U.S. crude oil plunged almost 20%, to below $15 on Monday, its lowest point since 1999, as stockpiles continued to build owing to a crash in demand caused by the COVID-19 pandemic. Moreover, doubts grew about Donald Trump’s plan of ending the lockdown and investors braced for a week of potentially damaging figures about the impact of the coronavirus on the world economy.
The U.S. has become the world's largest oil producing nations in recent years as a result of shale extraction. However, the meteoric rise of shale producers has come with large debts. An extended period of low prices could force smaller firms out of the market. Producers have been lobbying lawmakers and President Donald Trump to intervene.
The oil market has come under intense pressure during the coronavirus pandemic with a huge slump in demand. U.S. storage facilities are now struggling to cope with the glut of oil, so that they weaken prices further. Earlier this month, OPEC member countries and their allies agreed a record deal to slash global output by about 10%. The deal was the largest cut in oil production ever to have been agreed. The chief commodities analyst Bjarne Schieldrop told CNBC that “The curves are saying there is a big problem with the storage of oil right now, the general market view seemed to be that the global economic trough and the oil demand trough would be April 2020. In the second half the year, the problem of storage capacity should vanish rapidly because oil demand is expected to rebound strongly, while inventories will draw down sharply”.