Oil market crash

It’s already become our custom that most of the troubles happen on Monday.

Important events accumulate over the weekend, and when the exchange starts operating, these events are reflected in prices.

Monday, March 9, was no exception; after the holidays, the oil market opened with a gap of simply enormous proportions.

The price of Brent crude oil simply collapsed from 45.35 on Friday to 35.22 on Monday, a drop of more than $10, or about 22%.

Such a huge collapse has not happened since 2015, and such a rapid one has not happened for several decades.

At the same time, the price of oil continues to decline, causing panic on world exchanges. Now it has already reached $31 and so far there are no special prerequisites for its increase.

Experts name two reasons for this phenomenon.

The first is the crisis caused by the coronavirus; large consumers have sharply reduced oil consumption, thereby reducing the demand for this product.

The second is Saudi Arabia’s announcement to increase oil production, the planned increase will be about 20% of existing volumes.

It’s even difficult to imagine to what point the decline will continue; some analysts are talking about $20 per barrel of Brent.

This scenario is quite likely if it is not possible to stop the coronavirus epidemic before the summer; a drop in sales will entail a shutdown of oil-consuming industries.

Consumption of gasoline and diesel fuel is already beginning to sharply decline; people prefer to postpone planned trips and stay at home.

If we talk about today's events, then with a high probability the price of oil is expected to undergo a quick correction in the upward direction, which will allow it to rise from $31 to $35 per barrel of the Brand brand.

Further price behavior will depend on the news, whether the OPEC countries will be able to reach an agreement, how actively the coronavirus will spread, and whether there will be reports about the appearance of a vaccine.