Oil prices on Monday crashed to record low as oil producers ran out of space in their storage facilities leaving US oil prices with an unprecedented fall from $18 a barrel to -$38 in a matter of hours.
The historic market collapse has been attributed to the Coronavirus outbreak which has led to a great fall in the global demand for oil.
Also, the lockdown order in the effected countries to enable them contain the spread of the noble Coronavirus has in turn badly affected economic activities, thus leaving American energy companies with so much unused oil sloshing around that it has no room to store it.
However, on Tuesday (today) prices rebounded above above zero, with the US benchmark West Texas Intermediate for May changing hands at $1.10 a barrel after closing at -$37.63 in New York on Monday.
In recent weeks, US shale prices saw a steady decline following the biggest slump in oil demand for 25 years steps due to restrictions on travel to curb the spread of COVID-19.
The fall in oil prices has further been exacerbated by the rising fears that the global economy may be facing its deepest downturn since the Great Depression.
In an effort to salvage the market, curb oversupply elicited by the Saudi Arabia-Russia price war and the plunge in oil demand as a result of the Coronavirus pandemic, OPEC and its allies recently agreed to lower their collective crude oil production by 10 million barrels per day (bpd) until the end of second quarter of 2020.
The historical crash in the oil prices on Monday, has painfully proved that OPEC+ could not readily salvage the market.
However, analysts and some industry players are optimistic that the market recovery is but around the corner. The recovery they said is expected to pick up over the second half of the year as tight restrictions on travel to help curb the spread of the virus are lifted.
It is believed that oil prices will naturally rebound as the demand for fuels and oil increase as economic activities resumes in different countries.
According to the analysts, oil prices may not reach the same price levels recorded at the beginning of the year before the outbreak but hinted that a rebound was sure.
Brent crude reached highs of almost $69 a barrel in January before plummeting to less than $23 a barrel at the end of March. Many market experts predict the price of Brent will remain below $50 a barrel this year.
Peace Obi
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