Crude oil futures plummeted on Monday, hitting levels not seen since 1999, pressured by continually reducing demand and worries that U.S. storage facilities are near capacity due to the current supply glut. Global storage capacity is already over 70 percent. OPEC and its allies have agreed to a production cut starting in May, but with ten days to go, and a huge oversupply already in place, things look poised to get worse before they get better.
U.S. WTI futures were down 18.83 percent as of 2:26 p.m. HK/SIN, to $14.83 per barrel. Brent crude futures were down 3.06 percent to $27.28 per barrel. According to CNBC analysts, one of the reasons behind the sudden price decline is the upcoming expiration of the May futures contract which is scheduled for tomorrow. The June WTI contract declined 5.47 percent to $23.66 per barrel. Prices are expected to remain under pressure until the burden on storage eases, which is unlikely to happen in the near term due to economic closures caused by the coronavirus pandemic. Demand is not rising, but production continues at high levels since production cuts were halted in April and production rates soared for the first time in over a year.
Currencies Move with Virus Updates
The U.S. dollar firmed on Monday as traders showed their preference for the currency as the most stable option as global economies start to reopen and traders of the outbreak may be possible. The dollar’s strength comes even as the country’s death toll surpassed 40,000 deaths. The greenback firmed 0.6 percent against the Canadian dollar, a currency which is especially sensitive to oil prices. The greenback also strengthened against the yen, heading up 0.31 percent to trade at 107.84.
The Australian dollar declined against the greenback, down 0.204 percent to $0.635 even as cases in the country declined and some beaches reopened, though most of the country’s lockdown rules remained in effect.
The currency that will be of extra interest in the coming days is the New Zealand dollar, as the country has all but halted the virus’s spread and expects to begin significant reopening measures next week, with Prime Minister Jacinda Ardern saying that if the first stage is successful, further easing of restrictions will be forthcoming next month. New Zealand’s ‘corona exit strategy’ is one of the most clearly-defined strategies in the world, and if successful, it may become a model for other countries.