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It will nonetheless take months before those cuts fall enough to come in-line with reduced demand - even if world economies rebound somewhat as people recover from the pandemic, which has killed more than 165,000 people worldwide. With storage soon to be completely full in the United States, crude will not have a place to go.
Crude stockpiles at Cushing rose 9% in the week to April 17 to around 61 million barrels, market analysts said, citing a Monday report from Genscape. The hub has capacity for roughly 76 million barrels.
"It’s clear that Cushing is going to fill and it will stay full for the next several months," said Andy Lipow of Lipow Oil Associates.
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Unless production is cut more swiftly, next month could see a repeat of Monday's frenzied activity with the June contract, which settled at $ 20.43, or $ 58 more than the impaired May contract.
"We're probably unfortunately going to see this dislocation in these energy contracts remain in place for next month as well," said Edward Moya, market analyst at OANDA. "You're going to see this remain in place until we really start to see the oil giants, the Exxons, the Chevrons, just be forced to stop production."
