While oil futures hit an 18-year-low on Monday, the prices of physical barrels from Europe to North America slumped to record discounts to benchmarks and trade in the teens and single digits, with traders scrambling to place physical crude barrels amid an unprecedented demand loss and growing global glut. ?

?Get it off before there aren't any more bids! Get to the front of the queue!? a European trader told Reuters as regional grades in Europe, the United States, and Canada hit their lowest levels in decades as demand continues to fall off a cliff and storage, where available, continues to fill.

Analysts expect 20 million bpd demand loss in April globally?this would be a 20-percent plunge in the typical 100-million-bpd global oil demand.

Refiners are cutting crude oil processing rates in Europe and North America, as major economies are either in lockdown or with tight travel restrictions, destroying millions of barrels of oil per day of oil demand for gasoline, diesel, and jet fuel.

On top of the colossal demand loss, Saudi Arabia's promise to flood the market with extra barrels of deeply discounted oil as of April 1 is putting additional pressure on the already deeply depressed physical crude markets in Europe and the U.S.

Therefore, prices for regional grades are trading at record discounts to the benchmark futures. While WTI Crude slumped to US$19 at one point in Monday trading, Mars US, the sour crude grade from the U.S. Gulf Coast, hit US$10 a barrel, the widest discount to the U.S. benchmark since 2008, according to Reuters estimates. WTI for delivery at the Magellan East Houston (MEH) terminal, a key export grade from the Gulf Coast, was priced at US$6 per barrel below the WTI Crude benchmark, the widest discount on record. Canada's Western Canadian Select (WCS) traded at below US$5 a barrel on Monday. ?

Traders are offering physical crude from the U.S. to Europe for May as early as in March, compared to what they would typically do in April in a ?normal' market, as they scramble to offload with buyers what could turn out to be distressed barrels of oil as demand is set to continue to plummet in the coming weeks. ?

By Tsvetana Paraskova for Oilprice.com

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