Oil at 18-year lows amid falling demand due to virus-related restrictions

US, WASHINGTON (ORDO NEWS) — Oil prices fell on Monday, with WTI dropping below $ 20 a barrel, and Brent hit an 18-year low amid rising fears that restrictions on coronavirus might stretch for months and demand will continue to decline.

Brent futures fell 10.11% to $ 22.41 per barrel by 17:33 Moscow time, having previously reached a low since March 2002.

Futures for US light oil WTI lost 6.83% to $ 20.04 per barrel, earlier during the session, falling to $ 19.92.

“Global oil demand is evaporating due to travel restrictions associated with COVID-19, as well as social distance measures,” said UBS oil analyst Giovanni Staunovo.

“In the near future, oil is likely to be traded even lower … in order to provoke a suspension of production and prevent overflows of reserves,” he added.

An official from the Saudi Arabian ministry of energy said the kingdom plans to increase oil exports to 10.6 million barrels per day starting in May due to a reduction in volumes used for power generation, as well as lower domestic consumption.

US President Donald Trump said he plans to have a telephone conversation with Russian President Vladimir Putin on Monday, adding that Saudi Arabia and Russia are “crazy” about the oil, which is under pressure from the economic slowdown due to restrictions on the fight against coronavirus.

U.S. energy companies cut the number of oil rigs last week at a record pace since April 2015 amid declining economic activity and demand due to the virus.

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