'There is potential this could go even lower.' Oil prices plunge to 17-year lows as demand drop threatens to overwhelm storage facilities.

REUTERS/Lucas JacksonTraders gesture at each other while working in the crude oil and natural gas options pit on the floor of the New York Mercantile Exchange March 7, 2011.
  • Crude oil prices tanked Monday as continued fears over the coronavirus pandemic slammed energy demand.
  • West Texas Intermediate (WTI) the US benchmark dropped below $US20 a barrel in Asian trading while Brent crude hit $US23.03, its lowest price since 2002.
  • The ongoing price war between producers Russia and Saudi Arabia alongside concerns over storage capacity has sunk prices.

Global crude oil prices tanked Monday amid continued concerns over the coronavirus pandemic’s impact on energy demand and the ongoing price war between Russia and Saudi Arabia.

West Texas Intermediate (WTI), the US benchmark dropped below $US20 a barrel in Asian trading while Brent crude hit $US23.03, its lowest price since 2002.

Both sets of futures regained some of their early losses in European trading hours but remain down. Brent crude is down 6.2% at $US26.23 while WTI is down 5.7% at $US20.21 as of 9.00 a.m. in London (4.00 a.m. ET).

“There is potential this could go even lower as supply starts to flood storage space which could fill in the next month as a result of the combination of higher supply from the price war and lower global demand,” Joe Healey, Investment Research Analyst at The Share Centre said in a morning note.

The widespread lockdown across much of Europe and North America has seen demand plunge while traders estimate that the market is pumping out a surplus of around 25 million barrels per day.

Despite pressure from Washington, Russia and Saudi Arabia remain at a stalemate over prices while many global airlines are grounded.

“Russia and Saudi Arabia show no signs of compromising in their standoff over oil supply,” National Australia Bank’s Rodrigo Catril wrote in a Monday note.

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