US benchmark, West Texas Intermediate, has fallen to the $11 range as global economies remain on lockdown due to the Covid-19 pandemic, crushing crude demand. To add insult to injury, global oil storage is reaching its limits. The situation is so dire, in fact, that the Department of Energy is even considering paying domestic oil producers to keep crude in the ground.
Just this Wednesday, the International Energy Agency reported a record 19 million barrel increase in domestic crude oil supplies.
Not even OPEC has been able to provide any relief for the ailing industry. While the cartel and its global partners were able to agree upon a 9.7 million barrel per day cut, the market clearly thinks it's not enough.
The oil price collapse is sending shockwaves throughout the entire industry, with oil majors slashing spending across the board, and explorers cutting as much as 13 percent of their drilling fleet as the crisis rages on.
Even if the RRC follows through with their plan to interfere with the free markets, however, many experts suggest that as much as 20-30 million barrels per day in demand is being decimated by Covid-19 – a far cry from what global oil producers have cut so far.
Source: rt.com
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