The United States’ flagship crude oil grade plunged on Monday to trade at about $10 a barrel, the weakest since late 1998 as demand plummeted due to the coronavirus pandemic and storage filled quickly.
The grade, priced at the heart of the Permian basin in Midland, Texas, traded at $9.50 below benchmark prices, reported Reuters, bringing the outright price to near $10 a barrel.
West Texas Intermediate crude (WTI) at Midland, along with other actively traded U.S. crude oil grades, have sharply weakened since the coronavirus pandemic has restricted the movement of billions of people around the world and shriveled energy demand.
A price war between Saudi Arabia and Russia that erupted earlier in the month has also flooded the market with supply, further weighing on export demand for U.S. grades.
WTI at East Houston (MEH) crude, one of the biggest Gulf Coast export grades, traded at minus $6.00 below benchmark futures, its lowest on record.
Traders have warned that Midland crude will continue to slide as storage tanks around the country quickly fill up, forcing producers in the largest U.S. shale basin to shut output and refiners around the nation to cut crude runs.
PBF Energy, the sixth-largest U.S. oil refiner, on Monday said it will cut spending and reduce production to minimum levels as demand for gasoline and fuels tumbles because of pandemic-related travel restrictions and lockdowns.
Rivals Valero Energy Corp and Exxon Mobil Corp also have cut production of gasoline, jet and diesel as they battle the financial fallout of the outbreak.
Prices for other export grades also weakened with Mars crude weakening to trade at $8 below futures, the lowest since 2008.