March 2020 has turned out to be one of the worst days for the crude oil market as prices dip to the lowest levels that have been witnessed over the past 18 years.
Crude oil prices in the U.S experienced a 7 percent dip on Monday which pushed to the day’s low at $19.27 before closing at $20.09 per barrel, thus hiding an 18-year-low. This underwhelming performance is largely attributed to the low demand for energy, especially fuel on account of the coronavirus pandemic. Bret oil prices were also hit by the bearish wave, leading to a low of $21.65 after a 13 percent decline.
Market experts anticipate a noteworthy drop in oil consumption in the Q1 2020 reports by around 12 million barrels daily. According to Bank of America, this will be a 12 percent decline which will be the largest decline witnessed in the history of the oil market. BOA analysts also noted that Russia and Saudi Arabia have been pumping excess oil into the market, when they should be holding off on account of the current market condition, thus hurting the markets even more.
Trump and Putin to discuss the matter
The situation in the oil market has gotten so bad that it warranted a lengthy phone call between U.S President, Donald Trump and Russian President, Vladimir Putin. The aim of the phone call was to discuss the way forward for the oil market whose prices have been exasperated by the ongoing coronavirus pandemic.
A follow-up statement released by the White House revealed that the two heads of state agreed to put resources together to try and restore balance to the crumbling markets. The news of the phone call between Trump and Putin may have contributed to improving oil prices on Tuesday morning. U.S crude recovered by 5.2 percent or $1.04 per barrel on Tuesday morning by around 0833 GMT. Brent Crude also saw a significant surge at 2.7 percent or 61 cents. However, the coronavirus cases are still rising and so it is still too early to tell whether the market is entering the recovery phase or not.