U.S. oil prices tumbled to their lowest level in more than 30 years on Monday, with crude storage facilities filling rapidly as the coronavirus pandemic continues to crush demand.
Oil fell to $11.54 a barrel on Monday, down more than 36 percent, on track for its worst day since 1983.
It comes amid heightened concern that the volume of oil held in U.S. storage is rising sharply, with the coronavirus crisis compounding the problem by dramatically reducing consumption.
Earlier this month, analysts at Goldman Sachs warned that the coronavirus shock was “extremely negative for oil prices and is sending landlocked crude prices into negative territory.”
“The U.S. situation is quite dire,” Daniel Hynes, senior commodity strategist at ANZ, told CNBC’s “Squawk Box” on Monday.
“Clearly, being a relatively landlocked market there, we are seeing real pressure on storage as a consequence of the collapse in demand,” Hynes continued. “Without any sort of hope I suppose, at least over the next month about that easing up. I think prices are going to remain under pressure.”
The COVID-19 outbreak has meant countries have effectively had to shut down, with many governments imposing restrictive measures on the daily lives of billions of people. It has created an unprecedented demand shock in energy markets, with storage space — both onshore and offshore — quickly filling up.
“Going forward, we are going to have to see a lot of declines in production in the U.S. in order to push this thing a little bit higher,” Samir Madani, founder of TankerTrackers.com, told CNBC on Monday.
“U.S. energy is very important for global energy security … because if it wasn’t for U.S. energy then prices would be a whole lot higher,” Madani said.