As WTI crude prices plummeted into a negative territory for the first time in history, downward pressure continued on Tuesday pushing both WTI and Brent future prices down.
After settling at -$37.63 a barrel on Monday, West Texas Intermediate contracts for May delivery settled on Tuesday at $10.01/Bbl. The month-ahead contract expired yesterday.
WTI futures for June delivery were trading at $11.57/Bbl, down 43% from the previous session. The decline suggests storage shortage concerns won’t shift away, unless demand loss starts to slow down, Kallanish Energy reports.
“Emergency conditions—especially lack of places to store oil—will remain until stay-at-home orders ease and production cuts can diminish the severe oil supply surplus,” commented Jim Burkhard, vice president and head of oil markets, IHS Markit.
GlobalData’s senior O&G analyst Adrian Lara noted “with no real certainty on when the U.S. lockdown will end and how quickly the economy will start transporting people and goods, the downward pressure on WTI will continue during the next months.”
Sharing pretty much the same faith, global crude benchmark Brent, also traded down on Tuesday. The oil futures posted a decline of $6.24, or 24.40%, settling at $19.33/Bbl.
The chaos in the industry stems from an extraordinary global demand loss due to the coronavirus pandemic, alongside the effects of an oil price war between Saudi Arabia and Russia.
Despite a truce and an agreement to cut at least 9.7 Mmbpd in May and June, Riyadh continues to flood the market with oil and large discounts. Both Saudi Arabia and Russia said Tuesday they were ready to take extra measures to stabilize oil markets but no action was taken yet.
This post appeared first on Kallanish Energy News.