MercoPress. South Atlantic News Agency

Oil glut and lack of storage continues to weigh on oil prices

Global oil demand has plummeted by about 30% as the coronavirus pandemic curtailed movement across the world.

Oil prices opened about one percent lower on Sunday as a persistent glut continued to weigh on prices and COVID-19 eroded global oil demand even as some governments began to ease lockdowns.

Brent crude was down 29 cents, or 0.9 per cent, at US$30.68 a barrel, while US oil fell 26 cents, or 1.1 per cent, to US$24.48 a barrel.

Global oil demand has plummeted by about 30% as the coronavirus pandemic curtailed movement across the world.

“Oil companies are dealing with a plethora of challenges due to the sudden decline in demand,” Haseeb Ahmed, oil and gas analyst at GlobalData, said in a note.

”North America is battling a severe shortage of storage capacity ... it may be only a matter of time, before the country (United States) runs out of storage space.”

However, both benchmarks have notched gains over the past two weeks as countries have eased lockdowns and fuel demand has rebounded modestly. Oil production worldwide is also declining to reduce a swelling supply glut.