Lowest International Oil Prices in 21 Years... "We Can't Stockpile More"

16% Drop to $15.37 Per Barrel

[Asia Economy Reporters Park Soyeon and Naju-seok] International oil prices have fallen again due to inventory concerns, hitting the lowest level in 21 years. This is because worries have intensified that oil inventories caused by oversupply can no longer be stored.

As of 10:30 a.m. on the 20th (Korean time), in off-exchange trading in the Asia region, the price of West Texas Intermediate (WTI) crude oil for May delivery fell 16% ($2.9) to $15.37 per barrel. This is the lowest level since March 1999.

According to Bloomberg News, the decline in WTI was due to reports that the oil storage facility in Cushing, Oklahoma, USA, is full. Concerns grew that domestically produced oil in the US might no longer find storage space, leading to the drop in WTI prices.

Australia and New Zealand Banking Group (ANZ) explained in an investment report, "Concerns continue that oil storage capacity in the US will be exhausted," adding, "In the case of the oil storage facility in Cushing, oil inventories have increased by more than 50% compared to early last month."

Domestic refiners are on the brink due to historically low oil prices. With the combined effect of the first quarter oil price crash and demand decline, domestic refiners are expected to incur operating losses of up to 3 trillion won. If oil prices remain at current levels, losses in the second quarter could be even greater. Recovery in consumption is not expected due to COVID-19. However, some analysts suggest that since the shock from low oil prices has already been absorbed, there is some immunity to further price declines.

An official from the refining industry said, "With international crude oil prices falling below $20 per barrel, a major shock was absorbed once, and it can be said that there is strength to withstand further declines," adding, "From the refiners' perspective, gradual fluctuations rather than crashes or surges are the best." A representative from the Korea Petroleum Association said, "Since there are no factors for demand increase due to the prolonged COVID-19 situation, oil prices are fluctuating greatly even with small news," and "Although domestic refiners suffered large inventory valuation losses due to the oil price crash in the first quarter, the deficit is expected to decrease somewhat in the second quarter."

This content was produced with the assistance of AI translation services.