Oil prices have edged down further due to worries about limited storage capacity for crude and expectations that fuel demand may only recover slowly if Covid-19 restrictions are gradually eased by the countries.
According to Reuters, West Texas Intermediate (WTI) futures were trading down to as low as $10.64 at $11.12 a barrel, while Brent crude LCOc1 futures were last down by $0.90 to $19.09 a barrel at 0432 GMT.
A portion of the decline in WTI is due to retail investment vehicles such as exchange-traded funds selling out of the front-month June contract and buying into months later in the year to prevent huge losses like last week.
As per the data from consultancy Kpler, global storage onshore is estimated to be around 85% full as of last week, due to collapse in fuel demand.
ING commodities strategy head Warren Patterson was quoted by the news agency as saying: “Looking ahead, and all attention will be on inventory numbers this week, and in particular the build we see at Cushing, the WTI delivery hub.
“If we see similar builds to the last few weeks, we will likely reach full capacity at Cushing over the first half of May, which should maintain bearish pressure on the market.”
Production cuts from OPEC+ will be effective from next month. The group has agreed to cut output by a record 9.7 million barrels per day (bpd), to counter the collapse of prices due to the virus outbreak.
Despite these record output cuts, the volume is not nearly enough to counter a demand drop of around 30 million bpd due to the restrictions.