Oil deepened losses, dropping to the lowest level since 2016 as the coronavirus pandemic threatens to bring the global economy to a standstill, battering fuel demand at a time when crude supply is surging. WTI futures fell 6% in New York on Tuesday as investors grappled with the possibility of a virus-induced global recession. The Federal Reserve announced the restart of a financial crisis-era program in an effort to stem the virus’s economic impact. U.S. stocks rebounded from the biggest rout since 1987 on the stimulus plan, but oil continued to reel from supply and demand shocks. Saudi Arabia plans to ship a record 10 million barrels a day in April.
“These are dramatic and unheard-of disruptions,” said Pavel Molchanov, energy research analyst at Raymond James & Associates Inc. “Lockdowns around the world alone would be enough to trigger a bear market for oil. Add in the collapse of OPEC+, those two create an unbelievably toxic combination. This crisis is shaping up to be the worst shock to global demand in modern history.”