Crude oil prices plunged sharply on Monday, pushing the front month contracts to their lowest close in more than 18 years.
Rising concerns about the outlook for energy demand due to businesses across the globe shutting down to prevent the spread of the novel coronavirus took a toll of oil prices.
Additionally, with large producers like Saudi Arabia and Russia not appearing keen on resorting to any meaningful output reductions, there is a possibility of a glut in the oil market.
West Texas Intermediate Crude oil futures for May ended down $1.42, or about 6.6%, at $20.09 a barrel, the lowest settlement since February 2002.
WTI crude oil futures dropped to a low of $19.27 a barrel during the session.
Brent crude futures declined more than 8.5% to settle at $22.76 per barrel, the lowest level in eighteen years.
The Bank of America has once again lowered its oil price forecasts. The bank said it expects to both contracts “temporarily trading in the teens in the coming weeks.”
Energy demand is likely to drop substantially as it is now feared that the global coronavirus shutdown could last months.
British officials warned that normal life may not return to the U.K. for up to six months.
The White House on Sunday sent out a dire warning, saying that a total of 100,000 to 200,000 Americans could eventually succumb to the virus in a worst-case scenario in two weeks coinciding with Easter weekend.
U.S. President Donald Trump on Sunday extended national social distancing guidelines until at least April 30th.
Trump had previously hoped to reopen the country by Easter Sunday, on April 12th, but said he decided to extend the guidelines in an effort to keep the death toll from the coronavirus below 100,000.
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