US crude fell about 20 per cent to below US$15 a barrel on Monday (Apr 20), its lowest level in about two decades, as a coronavirus-triggered collapse in demand eclipsed a deal to cut output.
West Texas Intermediate, the US benchmark, fell 18.7 per cent to US$14.84 a barrel.
Brent crude, the international benchmark, was off 1.5 per cent at US$27.64 a barrel.
Oil markets have plunged in recent weeks as lockdowns and travel restrictions around the globe batter demand for the commodity.
The crisis was compounded after Saudi Arabia, kingpin of exporting group OPEC, launched a price war with non-OPEC member Russia.
They drew a line under their dispute earlier this month when they and other countries agreed to cut output by almost 10 million barrels a day to boost virus-hit markets.
But prices have continued to fall heavily, with analysts saying the cuts will not be enough to make up for massive falls in demand caused by the pandemic.
“Crude oil prices remained under pressure, as projections of weaker demand weigh on sentiment,” ANZ Bank said in a note.
“Despite the OPEC+ alliance agreeing to an unprecedented cut in output, the physical market is awash with oil,” it said referring to the Organization of the Petroleum Exporting Countries and non-OPEC partners.
“Concern continues to mount that storage facilities in the US will run out of capacity,” the bank added.
The US Energy Information Administration said crude inventories in the world’s biggest economy rose by 19.25 million barrels last week, adding to the woes of the oversupplied world market, where demand has been hammered by the coronavirus pandemic.
The oil industry has been swiftly reducing production in the face of an estimated 30 per cent decline in fuel demand worldwide.
Saudi Arabian officials have forecast that total global supply cuts from oil producers could amount to nearly 20 million bpd, but that includes voluntary cuts from nations like the United States and Canada, which cannot simply turn on or off production in the same way as most OPEC nations.
Numerous majors have announced supply reductions, including Chevron Corp, BP and Total. But economic growth is sagging swiftly, and physical crude markets suggest prices will keep falling.
North American exploration and production companies have cut their budgets by roughly 36 per cent on a year-over-year basis, according to a Sunday note from James West, analyst at Evercore ISI, while international companies have cut budgets by 23 per cent.