By Barani Krishnan
Investing.com - Oil slid again Monday, with WTI trading a couple of dollars above the key $20 support as the U.S. Senate remained in disagreement on how to proceed on a gigantic stimulus package aimed at providing a soft landing for the world’s No. 1 economy amid the Covid-19 crisis.
The IMF, meanwhile, warned that pandemic could leave the world with a recession as bad as the 2008-09 financial crisis.
West Texas Intermediate, the New York-traded benchmark for U.S. crude prices, was down 12 cents, or 0.5%, at $22.51 per barrel by 1:28 PM ET (17:28 GMT).
WTI fell 29% last week for its biggest weekly loss since the week ended Jan. 13, 1991, when it fell 29.5%.
Brent, the London-traded global benchmark for crude, slid 58 cents, or 2.1%, to $26.40. Brent lost 25% last week.
Some analysts are anticipating that both WTI and Brent could break $20 lower support soon.
“The largest oil supply surplus the world has ever seen in a single quarter is about to hit the global market from April, creating an imbalance of around 10 million barrels per day (bpd),” analysts at Rystad Energy said in a note released late Friday.
The consultancy estimated that, on average, 76% of the world’s oil storage capacity was already full and current average filling rates indicated by balances were unsustainable.
“At the current storage filling rate, prices are destined to follow the same fate as they did in 1998, when Brent fell to an all-time low of less than $10 per barrel,” Paola Rodriguez-Masiu, senior oil markets analyst at Rystad Energy, added.
On Washington’s Capitol Hill, Republican senators on President Donald Trump’s side and rival Democrats sparred over what should go into a $2 trillion stimulus package they were due to vote on later in the day. The two sides reached broad agreement last week on help for both businesses and families as large swathes of the U.S. economy were shut to break the spread of the contagion.
“It’s not ‘world has shut down’ and it is not ‘world will maybe shut down’: it is happening and everyone says it will get worse before it gets better – from economists to doctors and epidemiologists,” said Igor Windisch of the IBW Daily Oil Brief. “And that will make the price of oil tank to the low $10s.”