Global oil prices fell below $16 a barrel for the first time since 1999 on Tuesday night as markets continue to struggle with oversupply caused by the coronavirus lockdown.

The price of Brent crude, the international oil benchmark, dropped to $15.98 a barrel in overnight trade before climbing back above $17 by mid-morning on Wednesday. The price is down from more than $28 a barrel last week.

The market panic caused US oil prices to turn negative for the first time as oil producers without access to storage space began paying customers to take their barrels from next month.

Severe restrictions on travel and the broader economy have caused demand for fuel and energy to fall at its fastest rate in 25 years.

Bjørnar Tonhaugen, the head of oil markets at Rystad Energy, said the world’s onshore oil storage would be filled to the brim by the first week of May and the market should brace for unprecedented low prices in the weeks ahead.

In previous weeks oil traders have held hope that prices could be kept afloat by a deal to rein in oil production, but Tonhaugen said rising storage levels had given rise to panic.

“Traders have exhausted their ‘hope storage’ and have nothing else to count on,” he said. “Prices can go to unprecedented low levels even for Brent as, unless there are further cuts announced, storage capacity will just not be enough.”

He said unless there was “a massive shock” such as oil well shutdowns equivalent to cutting millions of barrels from global production or an earlier than expected lifting of lockdown measures, oil may soon be “cheaper than a latte”.

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