Oil price: Brent crude drops below $18 a barrel, down more than 8%

Brent crude fell more than 8% to below $18 a barrel Wednesday while US oil struggled to hold on to early gains as the coronavirus ravages energy markets. 

Brent, the European benchmark, was down 8.79% at $17.63 a barrel in Asian trade, extending heavy losses from a day earlier. US benchmark WTI was up almost 3%, after rising 20% earlier in the session.

Both main oil contracts struggled to maintain early gains Wednesday following another painful rout, while equity traders continued their flight to safety for a third day to extend a global sell-off.

The price of Brent crude oil dives

With demand virtually non-existent owing to virus lockdowns, and production still high despite storage at bursting point, crude markets have been sent into freefall with WTI for May delivery diving to minus $40 on Monday.

Focus has turned to the June contract, which was faring slightly better but still lost almost half its value on Tuesday, while Brent collapsed by a fifth.

In early trade on Wednesday, WTI bounced 20% but was unable to maintain all the gains, while Brent went into reverse.

The crisis in the oil market caused by coronavirus was compounded by a price war between Russia and Saudi Arabia, but while they drew a line under the row and joined other key producers in slashing output by 10 million barrels a day, that has not been enough.

Crude’s rout “merely reflects the underlying theme that there is no demand for physical oil, and there is nowhere to store it”, said AxiCorp’s Stephen Innes.

This is a developing story, more details to follow – by Agence France-Presse (AFP)