U.S. oil prices took another nose dive Monday as worries grew as quickly as the Cushing storage tank farm filled with oil because of the coronavirus pandemic.
Futures dropped nearly 25% as West Texas Intermediate finished the day at $12.78, a drop of $4.16 or 24.56%. At one point, the WTI traded as low as $11.88.
International Brent crude dropped nearly 7% to end the day at $20 a barrel, a decline of $1.44.
WTI for July delivery fell more than 14% to $18.18 while the August contract slipped more than 9% to $21.50, suggesting the Street doesn’t see a meaningful recovery in the next few months.
“The market knows that the storage problem remains and we are on a calculated path to reach tank tops in weeks,” said Bjornar Tonhaugen, head of oil markets at Rystad Energy. “Actions are needed now as the problem stopped being theoretical and far away. The storage clock is ticking for producers and we are approaching the final countdown if no further action is taken.”
WTI, the U.S. benchmark, has fallen more than Brent as traders eye the quickly filling tanks at Cushing, Oklahoma, which is the nation’s largest storage facility apart from the Strategic Petroleum Reserve. It’s also where the contract is priced. U.S. stockpiles rose by 15 million barrels to 518.6 million barrels for the week ending April 17, according to the U.S. Energy Information Administration.
At closely watched Cushing, oil in storage rose by about 10% in a week to 59.7 million barrels, about 25 million barrels shy of its capacity.
With prices at such depressed levels — WTI and Brent have dropped 72% and 68% this year, respectively — producers are struggling to breakeven. On Sunday, Houston-based Diamond Offshore Drilling filed for bankruptcy protection, and analysts say that more bankruptcies could be coming.
Natural gas prices traded 7 cents high and ended Monday at $1.82 per MMbtu on the New York Mercantile Exchange.
Checking some of the local stocks, Chesapeake Energy shares plunged more than 21%, dropping $8.44 to $31.50 per share.
ConocoPhillips added $1.06 to reach $37.15 while Marathon Oil was down 8 cents at $4.85.
ONEOK was up 86 cents at $28.52 and Phillips 66 rose $2.96 to hit $63.49 a share.
American Electric Power rose 39 cents and hit $83.62 for the day.