Oil’s getting hammered by a unique concurrence of demand and supply shocks that could send prices into the $20s, according Ed Morse, Citigroup Inc.’s head of commodities research.
Crude prices were already falling as the global fallout from the coronavirus destroys demand, but the collapse of the OPEC+ coalition and ensuing price war between Russia and Saudi Arabia sent prices 30% lower on Monday. The rout could deepen in coming weeks, according to Morse.
“This is the first time I can recall that there has been a significant oversupply crunch and demand shock at the same time,” Morse said in a phone interview.
“The combination is really unusual and makes it more difficult to see how you work your way out of it.”
Morse has seen his share of oil crises, focusing on international energy policy in the U.S. state department starting in the late 1970s, to publishing industry journal Petroleum Intelligence Weekly through most of the 1990s, followed by positions at Hess Trading Co., Lehman Brothers and Credit Suisse Group AG
