Investors have once again left the assets because according to Goldman Sachs, since governments around the world are urging residents to limit travel and isolate themselves, by the end of March, global oil demand could fall by 8–9 million barrels per day.
Aside from that, the oil market was already shaken, since Saudi Arabia failed to reach an agreement with Russia.
"Everything changed very quickly. One extreme event collided with another," John Saucer, Vice President of Research and Analysis at the Mobius Risk Group in Houston, said.
So far, Saudi Arabia has ignored the request to balance the markets.
At the same time, US oil futures fell, as the weekly US data showed a marked decline in gasoline and diesel inventories. Oil stocks rose by 2 million barrels, while gasoline and distillate stocks declined by 6.2 million and 2.9 million barrels, respectively.
Both commodity indicators reached quarterly declines of about 60%.
Goldman Sachs forecast that Brent prices will drop to $20 in the second quarter.
Analysts say that the sharp drop in US oil prices reflects the increasing bleak outlook for the markets. Traders believe that the increase of activity in Saudi Arabia in the coming weeks will limit the exports, quickly fill storage facilities, and reduce the amount of processing that will be installed in the United States.
"The markets are virtually inactive," Scott Shelton, energy specialist at ICAP, said. "This tells me of a decline until either OPEC returns to negotiations, or US E&P starts announcing production cuts."
Iraq's oil Minister has called for an emergency meeting between OPEC and non-OPEC oil producers to discuss immediate actions to support the market.
The price war between Saudi Arabia and Russia has increased pressure on the market.
The Kremlin said that Russia wants the oil's price to be higher, but the Saudi Ministry of Energy had instructed the national oil company, Saudi Aramco, to continue delivering crude oil at a maximum of 12.3 million barrels per day in the coming months.
"With the Saudis and Russians fighting a tough battle for market share, it is difficult to find any quick solution on this front," ING responded to Iraq's request.
Meanwhile, Japan's trade bureau said that oil imports fell by 9% in February, as compared to the same period of last year.
In addition to the information above: social restrictions that have not been in place since the World War II have been revived, the world's wealthiest countries are willing to spend trillions of dollars in order to reduce the effects of the coronavirus, and businesses are reducing their operations to keep the majority of employees at home and use only the necessary labor in public places.
The material has been provided by InstaForex Company - www.instaforex.com