Oil collapses to USD 10 as world awash with crude

US oil prices dived to 34-year lows at USD 10 on Monday after crashing more than 45 per cent in a market flooded with crude as demand evaporates in the face of the coronavirus pandemic.

The US benchmark West Texas Intermediate (WTI) crude for May delivery sank to USD 10.01 per barrel, its lowest level since 1986.

The steep decline was driven by investors closing out their positions ahead of the May contract expiry on Tuesday. Investors left holding the contracts will have to take physical delivery of the contracts as storage is quickly becoming an issue.

The drop on the WTI June contract was less severe -- 8.8 per cent to USD 22.82.

"The real problem of the global supply-demand imbalance has started to really manifest itself in prices," said Rystad Energy analyst Bjornar Tonhaugen.

The European benchmark contract, London Brent North Sea oil for June delivery, was down 6.3 per cent at USD 26.30 per barrel.

"As production continues relatively unscathed, storage is filling up by the day. The world is using less and less oil and producers now feel how this translates in prices."
"It hasn't taken long for the market to recognise that the OPEC+ deal will not, in its present form, be enough to balance oil markets."