WTI drops below $13 on storage concerns

• Russia will reportedly cut its oil output by 19% in May.
• Brent oil drops below $20 for the first time since February 2020.
• Global oil storage capacity could reach its limits in about a month.

After posting strong recovery gains in the second half of the previous week, crude oil prices started the new week on the back foot amid concerns over global oil storage capacity reaching its limits.

Crude oil selloff picks up steam

As of writing, the barrel of West Texas Intermediate was down 26% on the day at $12.80 while the barrel of Brent was trading at its lowest level since February 2002 at $19.70.

In a recently-published report, Goldman Sachs analysts said that the global oil market could test the storage capacity limit in less than a month, which would force 20% of global production to stop. "Producers will be forced to shut enough supply to match the demand loss - a cut of around 18 to 20 million barrels a day by mid-May," analysts said and added that this situation would likely trigger further price volatility.

Meanwhile, Russia will lower its oil output by around 19% from its March-April level to 8.5 million barrels per day, Interfax news agency reported, citing Lukoil officials. However, this headline did little to nothing to help crude oil prices find support on Monday.

Later in the week, investors will be paying close attention to the API's and the EIA's weekly inventory data. 

Technical outlook

Oil New York Price Forecast: WTI heading lower again, trades sub-$14.00 a barrel.