Oil slumps 26%, ending 3-day winning streak as global oversupply outweighs production cuts

• WTI crude oil plummeted as much as 26% on Monday, ending a three-day streak of gains as fears of a storage crisis returned.
• Brent crude slid as much as 7% to $19.88 per barrel.
• The market downturn comes as major producers act to curb the global oversupply. Saudi Arabia accelerated production cuts originally planned for May 1, and US drillers paused much of their activity to prop up demand.
• Watch oil trade live here.

Oil plunged as much as 26% on Monday as efforts to curb production came up short against a global commodity glut and severe lack of storage.

West Texas Intermediate crude tumbled below $13 per barrel, erasing gains made since Wednesday. Brent crude, the commodity's global benchmark, slipped as much as 7% to $19.88 per barrel.

Oil prices remain under historic pressure from dwindling storage around the world and a lack of demand amid the coronavirus pandemic. Saudi Arabia has already accelerated its production cuts ahead of a May 1 deadline, and firms in the US have paused much of their drilling operations to slow the market oversupply.

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The cuts may not be enough to avoid reaching the world's storage capacity. While several nations have shown success in containing the coronavirus, the lagging oil market could hit its storage limit as soon as mid-May, Goldman Sachs analysts wrote Friday. Such an event would require shutting in roughly 20% of worldwide pumping activity, the team added.

South Korea reached its storage cap on Monday, Bloomberg reported. The US's delivery hub in Cushing, Oklahoma, is also nearing its limit, threatening to spike WTI contract volatility as the deadline for June deliveries looms.

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The slide breaks a three-day streak of gains made after WTI contracts for May delivery plummeted to negative prices for the first time ever on April 20. Traders were forced to pay others to get contracts off their hands, desperately trying to offload the unwanted inventory. The May contracts expired on Tuesday, leaving traders with a few weeks before a similar market spiral could repeat itself with WTI's June vehicles.

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