Futures tumbled by more than 6 percent after losing a quarter of their value last week – the largest drop since 2008. Even a massive emergency move by the US Federal Reserve to cushion the world’s biggest economy just added to the fear gripping markets, with New York crude at one point dropping below USD 30 a barrel. Gasoline prices collapsed in the US.
The market is being pushed deeper into turmoil by unprecedented simultaneous demand and supply shocks. Forecasts for global oil use are being cut dramatically as government measures to contain the spread of the pandemic restrict the movement of people and throw supply chains into chaos. At the same time, giant producers are embarking on a destructive price war after the disintegration of the OPEC+ alliance that’s unleashing a flood of supply.
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