Overnight, Oil has plunged to a 21-year low – in fact, the commodity’s latest round of selling comes as uncertainty mounts around storage for excess oil, reports Business Insider. Demand for crude has plummeted since the coronavirus outbreak has frozen activity worldwide.[Tweet “Demand for crude has plummeted since the coronavirus outbreak has frozen activity worldwide.”]
WTI crude oil plunged as much as 21% to $14.47 per barrel. It later pared losses and traded roughly 15% lower to $15.30 on Monday morning. Brent crude losses were muted by comparison, with the commodity sliding by 3% to $27.81 per barrel.
The price of oil continued to collapse even after OPEC (The Organization of the Petroleum Exporting Countries) and allies agreed to the biggest-ever production cut, a cut intended to backstop prices. Yet investors remain unconvinced the cuts can offset cratering demand for the commodity as society has been grounded due to the coronavirus.
Concerns around storage come as near-term WTI crude prices trade at large discounts to longer-dated contracts. That dynamic is playing out amid worry that a key storage hub in the US is nearing capacity, according to Bloomberg.
Oil Prices in South Africa
The Rand, currently trading at R18.71/$, fell by almost 4% since the start of the month – usually, this would mean that imported oil is more expensive. But the oil price slump has cancelled out the rand losses, and – at this stage – will ensure a deep cut in petrol and diesel prices.
According to the latest estimates from the Central Energy Fund, the price of 95 petrol could be lowered by more than R1.80 a litre in the first week of May, while 93 petrol will go down R1.73 ($0.09).
This will bring the price of 95 petrol in Gauteng to around R12.16 ($0,64) a litre, and 93 to just lower.
In April, 93 unleaded petrol was cut by R1.76 ($0.093) while 95 unleaded petrol fell by R1.88 ($0.099).
Diesel prices look set for a cut of R1.15 ($0.061) to R1.20 ($0.063) a litre in the first week of May.
Edited by Luis Monzon
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