Invest
Oil could see single-digit prices
Following Russia and Saudi Arabia ramping up oil production as demand for oil falls, consumers could be the major winners as the price of petroleum drops to single digits, industry experts have suggested.
Oil could see single-digit prices
Following Russia and Saudi Arabia ramping up oil production as demand for oil falls, consumers could be the major winners as the price of petroleum drops to single digits, industry experts have suggested.

State Street Global Markets (SSGM) said it can’t rule out oil prices below US$10 a barrel as demand drops by more than 20 million barrels per day.
“As we look at pictures of empty streets in London, New York and other major cities around the world, it is clear 2020 is going to see far fewer miles driven,” said Ben Jones, multi-asset class strategist at SSGM.
“US gasoline consumption alone averages 9 million barrels per day throughout the year and would normally be expected to increase in the coming months as the US driving season (April-September) gets underway. However, the reverse trend is likely to be seen this year, as it is not just local travel restrictions that are hitting oil demand.”
Airlines are also grounding large sections of their fleets, and while planes are still transporting cargo, a “conservative estimate” of 50 per cent fewer flights would still see a reduction of 5 million fewer barrels of oil a day.

“Despite these statistics, major oil producers continue to pump more,” Mr Jones said.
“From 1 April, Saudi Aramco will open the taps and produce 12 million barrels of oil a day, up from an average of 10 million. From a budget perspective, Saudi Arabia will need oil prices of around $87 to breakeven, whereas Russia needs oil at just $42. There is no sign that Saudi Arabia and Russia will return to the negotiating table any time soon, so we expect little softening in either’s stance.”
US shale may be able to sell to the US Strategic Petroleum Reserve at relatively high prices, but with supply now exceeding demand by more than 20 million barrels a day, those stores could fill within three to four months.
“Storage is profitable at the moment, as the futures market has moved into “super contango”. However, oil has had its worst quarter ever in dollar terms, but single-digit oil is still a possibility,” Mr Jones said.

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