This week kicked off on a rather dull note for the oil industry as oil prices plummeted to 18-year lows and it looks like the situation might not get better any time soon.
Oil prices remained iffy on Wednesday morning and even experienced a slight decline despite expectations of a recovery. WTI Crude slumped to $20.21 but it experienced as slight upside that allowed it to trade at $20.77 at the time of this press. Brent Oil hit Wednesday morning’s low at $25.40 but it has since then experienced a slight recovery to $25.56.
The current performance highlights the oil market’s failure to recover despite reports of a phone call between U.S President, Donald Trump and Russian President, Vladimir Putin. The two reportedly discussed the dire situation in the oil market and they allegedly agreed to collaborate so that they can implement recovery measures to help boost the market.
There was a slight uptick in prices on Tuesday following the news of the phone call. However, it looks like that was not enough to facilitate a significant price recovery, which means that oil prices are still dangerously low.
The Coronavirus remains the major culprit
The negative economic impact of the coronavirus is the major reason behind the failure of the oil industry to bounce back despite reports of government intervention. This comes in the wake of concerning reports about rising infection figures in the U.S, as well as the increasing number of people who have succumbed to the illness.
So far more than 185,000 people have been infected in the U.S and almost 4,000 people have died in the U.S so far. To make matters worse, the White House expects the situation to get worse. This means that self-isolation and quarantine measures will remain in place and that also means that demand for oil will remain low as people remain indoors and fights remain grounded. In other words, the outlook for oil prices remains dull.