2020.04.2710:19:00UTC+00Oil Prices Tumble Again On Storage Fears

Oil prices plunged on Monday amid fears that storage at Cushing, Oklahoma, could reach full capacity soon and that production cuts might not be enough to counter the huge fall in demand amid the coronavirus pandemic.

Benchmark Brent crude tumbled as much as 92 cents, or 3.7 percent, to $23.90 a barrel, while U.S. West Texas Intermediate June futures were down over 16 percent at $14.18 a barrel.

Concerns surrounding rising inventories and weak demand are weighing heavily on sentiment, making it difficult for leading producers to balance the market by curbing output.

The Organization of the Petroleum Exporting Countries and its allies including Russia, a group known as OPEC+, pledged earlier this month to cut output by an unprecedented 9.7 million barrels per day in May and June.

Kuwait and Azerbaijan are coordinating cuts, while Russia is set to reduce its western seaborne exports by half in May.

Amid the rush to cut output, rig counts in the United States are down to the lowest since July 2016, while the total number of oil and gas rigs in Canada has fallen to the lowest since at least 2000, according to Baker Hughes data.

Expressing their outlook on the global oil storage capacity and its implications on oil prices going forward, analysts at Goldman Sachs Group said the swelling glut will test storage capacity limits in as little as three weeks.