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The price of a barrel of Brent Crude – the UK benchmark for oil – has slipped below $20, its lowest level since 2002.
The close to 20% slump follows negative prices being recorded for a barrel of West Texas Intermediate (WTI), the benchmark for US oil.
Negative oil prices on Monday were a “quirk”, says one market expert.
The price of US oil – which slumped to minus $37 a barrel at one point – was produced by a trading deadline and is now back to a positive figure.
“Yesterday’s price action is best understood as a quirk or peculiarity of futures trading,” said analyst James Trafford of Fidelity International.
He reckons the unprecedented price movement confirms that near-term demand is very weak.
“But it isn’t cataclysmic,” he said. “We don’t see negative oil prices as a new normal, going forward.”
Oil prices have weakened sharply because of a combination of oversupply and a collapse in global demand due to the decline in economic activity caused by coronavirus lockdown measures.