Crude oil prices continue to decline on Monday after the cut of interest rates by the US Federal Reserve and other central banks around the world failed to reassure investors. At the same time, oil markets are also affected by the price war, which continues to escalate between top commodity producers.

The price of the international Brent benchmark dropped by 1.94 USD, or 5.74%, to 31.89 USD per barrel, while the futures on the US light crude oil WTI are down by 4.1% to 30.43 USD per barrel.

The price of crude oil ​​has come under heavy pressure from both demand and supply. Concerns about the downturn in demand for the coronavirus pandemic were compounded by fears of oversupply after Saudi Arabia increased yields and lowered prices to support sales in Asia and Europe.

Earlier this month, OPEC and Russia failed to agree on an extension of the production cutback agreement, which has maintained prices since 2016.

On the other hand, the Fed cut its benchmark interest rates on Sunday for a second time this month and said it would inject 700 billion USD in liquidity into the economy in the coming weeks to ease tensions in the financial markets. Fear remains a major issue here, as market participants are not convinced that monetary easing and liquidity injections will solve the health crisis essentially.

Despite the huge drop in oil and natural gas prices last week, the number of installations in the United States rose for the second consecutive week to its highest level since December, energy services company Baker Hughes Co said on Friday.

However, the number of platforms is expected to decrease as manufacturers deepen the cost of new drilling.

US producers are worried about the price difference between the Brent and WTI varieties, which is the lowest since 2016. This makes crude oil in the US uncompetitive in international markets. Exports are expected to drop by 1 million barrels a day in April and May, sources say.

“The big loser will be the American slate. Probably soon, the Republican government will face the need to rescue the heavily indebted industry”, said Jeffrey Halley, senior market analyst at OANDA.