Some Canadian crude is already trading not far off $10 per barrel because of steep price discounts to USA benchmark WTI crude.
These were the details of the news Saudi Arabia suffers plummeting oil prices due to coronavirus for this day. Standard Chartered Plc predicted the low for the global benchmark crude will likely be well below US$20 next quarter, while Mizuho Securities warned prices could go negative as Russian Federation and Saudi Arabia flood the market. In Canada, the benchmark crude price for tar-sands producers, known as Western Canadian Select, plunged to $9.19 a barrel.
Meanwhile, casting further holocaust over crude oil futures' prices over the coming days, a partner at Again Capital Management in NY said on Tuesday (March 17th), "You're getting new demand destruction news coming at you every hour".
The Kremlin said on Wednesday Russia would like to see the oil price higher than current levels. Many forecasters have adjusted down estimates on demand for crude, as the virus disrupts business activity, travel and daily life. Saudi Arabia has so far ignored entreaties to act to balance the market, reiterating plans to maintain production at more than 12 million barrels per day, which would be a record. Elsewhere, Iraq's oil minister pleaded for an emergency meeting between members of the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC producers to discuss immediate action to help balance the oil market.
It estimated that if the price war continues amid a global recession and the coronavirus pandemic, the surplus could range between 800 million and 1.3 billion barrels in the first six months of 2020. "What is coming will be twice that or more", said Jim Burkhard, vice president and head of oil markets at IHS Markit. Rystad Energy says a "tsunami" of 3 million extra oil barrels per day are set to come by April, even as consumption declines due to a global shutdown due to coronavirus concerns.
"Some of them (U.S. shale oil companies) may not survive prolonged low oil prices, and in this event USA production would decrease". Brent crude prices have fallen nearly 45% in March alone, following the most pronounced demand destruction since the financial and economic crisis of 2008.
The United States has said it will take advantage of low oil prices to fill its Strategic Petroleum Reserve (SPR), and other countries and companies are planning similar measures to fill storage tanks. However, the purchases are not seen as likely to offset the drop in demand nor the increase in supply, Energy Aspects said in a note.