West Texas Intermediate (WTI), the benchmark for the US crude prices, plunged as much as 44 per cent to hit $10.26 per barrel on Monday morning, its lowest level since 1986, amid muted demand for crude in wake of coronavirus pandemic which has frozen economic activity globally. The May contract of US West Texas Intermediate futures witnessed sharp sell-off ahead of Tuesday's expiration.
In New York, West Texas Intermediate fell as much as 43.8 per cent, the most since the contract began trading in 1983, to $10.26 a barrel, the weakest level since 1986, according to a Bloomberg report. The June contract was trading 8.8 per cent lower at $22.83 a barrel at 10:46 am local time.
Meanwhile, international benchmark Brent crude declined as much as 8.1 per cent to $26.69 per barrel.
The fall in US oil prices was attributed to rising volume of oil in US storage and coronavirus crisis which has led to sharp decline in consumption. Even the unprecedented output deal between Organization of the Petroleum Exporting Countries (OPEC) and allied members to curb supply failed to contain the sell-off as traders' sentiments remained fragile amid concerns over the economic impact of coronavirus pandemic.
The price is predicted to fall further to below $10 despite the production cuts as the world may soon run out of space to store its extra oil.
The low price is a respite for country like India that imports about 82 per cent of its required crude and it alone accounts for over 20 per cent of the country's whole merchandise imports. The country's current account deficit (CAD), the difference between inflow and outflow of foreign currency, could turn positive in this financial year with crude prices at its record low in the recent history. This could help rupee get some cushion, while India's economic growth is expected to crash in this financial year.
The worldwide death toll from the novel coronavirus pandemic rose to 165,216 on Monday, according to a tally from official sources compiled by news agency AFP. In the United States, now the worst-hit country, the death toll stood at 40,683 with 759,786 infections. At least 70,980 patients have recovered, the agency reported.
By Chitranjan Kumar
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