A new downturn in oil .. Will the scenario for a collapse in US crude prices be repeated?

Crude oil prices continued their decline for a second day in a row, and US crude contracts for June delivery fell near $ 10 a barrel, driven by oversupply and continued global demand contraction, and concerns about diminishing global crude storage capacity.

Although many economies announced the start of a gradual opening of their markets and productive sectors, this did not open the appetite for crude prices, which ranged in low levels.

Within the hours of eighteen and 19 minutes UTC, US West Texas Intermediate crude futures for next June fell 17.14% to $ 10.6 a barrel, before continuing its losses.

Brent crude futures for June delivery also fell to $ 18.85, before cutting back slightly from its losses, but it remained below $ 20 a barrel.

And yesterday, Monday, US crude tumbled 25%, and Brent crude retreated from the level of $ 20 a barrel, driven by the flight of tense investors from the US benchmark due to a lack of available storage capabilities to deal with a collapse in demand caused by the Corona virus pandemic.

This drop comes with expectations that the American Oil Fund will get rid of oil contracts for the delivery of next June, amid fears of a recurrence of the scenario of falling prices for contracts for May delivery, which amounted to minus $ 40 a barrel last week.

Kuwaiti oil expert Dr. Ahmed Badr Al-Kouh did not rule out a repeat of the scenario of what has come to be known as the Black Two in oil markets.

Al-Kouche told Al-Jazeera Net that "there are possibilities with that, especially since the same factors are still present, that is, stockpiles full in exchange for weak demand."

He added that everyone has learned from the last Monday lesson, and he wants to get rid of the oil contracts in his possession, fearing that he will be forced to sell them at low prices the sooner the deadlines for the end of trading contracts for next June delivery.

The "OPEC Plus" agreement The OPEC Plus
coalition begins early next month to reduce oil production by 9.7 million barrels per day for two months, in an agreement described as the largest historic production cut.

The production cut will also be reduced to an average of 8 million barrels per day from next July to the end of 2020, followed by an agreement to reduce production cuts to 6 million barrels per day, beginning at the beginning of the year 2021 to April 2022. 

Even with the Organization of the Petroleum Exporting Countries (OPEC) and its allies, led by Russia, agreed to a record cut in oil production, the size of the cut was insufficient to make up for a drop in demand by about 30 million barrels per day due to the pandemic restrictions, "Covid 19".

As a result of the demand collapse, global wild storage capacity is estimated to have filled 85% last week, according to data from the Kepler Consulting firm.