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caption: Pump jacks draw crude oil near Long Beach, Calif., on March 9. A U.S. crude oil benchmark has hit 34-year lows.
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Pump jacks draw crude oil near Long Beach, Calif., on March 9. A U.S. crude oil benchmark has hit 34-year lows.
Credit: AFP via Getty Images

Free-Falling: Oil Prices Keep Diving As Demand Disappears

How low will oil prices go?

One American oil benchmark, West Texas Intermediate, fell by an astonishing 40% on Monday as global oil markets continue to grapple with a pandemic-driven collapse in demand.

At one point in the morning, a barrel of WTI hit $10.34 — the lowest price in 34 years. At the start of 2020, a barrel cost around $60.

The plummeting price of WTI is driven partly by a trading contract deadline — oil traders have until Tuesday to sell off the current futures contract. Other types of crude, without a deadline coming up that quickly, have not dropped nearly so sharply.

But in general, crude oil prices are very low and continue to fall. Brent, an international benchmark, is in the mid-$20s and fell more than 5% on Monday.

Oil producing countries and companies are trying to reduce their output, but they can't keep pace with the extremely rapid drop in global demand, as the world economy hits the brakes.

That's creating a massive oversupply of oil and raising concerns about where buyers will be able to physically store it all. [Copyright 2020 NPR]