Oil slumps 21%, ending 3-day winning streak as global oversupply outweighs production cuts
Oil prices remain under historic pressure from dwindling storage around the world and a lack of demand amid the coronavirus pandemic. Saudi Arabia has already accelerated its production cuts ahead of a May 1 deadline, and firms in the US have paused much of their drilling operations to slow the market oversupply.
The cuts may not be enough to avoid reaching the world's storage capacity. While several nations have shown success in containing the coronavirus, the lagging oil market could hit its storage limit as soon as mid-May, Goldman Sachs analysts wrote Friday. Such an event would require shutting in roughly 20% of worldwide pumping activity, the team added.
South Korea reached its storage cap on Monday, Bloomberg reported. The US's delivery hub in Cushing, Oklahoma, is also nearing its limit, threatening to spike WTI contract volatility as the deadline for June deliveries looms.
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