Newsbrief: Oil prices hit lowest since 2002

by Jake Mott

Oil prices briefly dropped to below $20 a barrel this week, hitting their lowest in the United States since 2002 according to The Wall Street Journal.

(Photo: Wall Street Journal)

Travel restrictions throughout the world have greatly diminished the demand for oil. On Monday, Goldman Sachs estimated that demand could drop by 26 barrels a day for this week alone, 25% total during the crises.

With the virus only beginning its economic impact here in the U.S., it’s suggested that prices could continue to drop further.

 “I think there’s too much hope in other financial markets—people are posturing for the bottom and as the tail of Covid-19 gets fatter more analysts are going to have to bring down their oil demand numbers for May and June,” said Edward Marshall, a commodities trader at Global Risk Management. “At that point we could see sub-$20-a-barrel Brent.”

This combines with the ongoing disagreements between Saudi Arabia and Russia concerning the production and distribution of oil. Even if the two countries were able to come to a compromise, the price would still drop overall because of the coronavirus.

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