U.S. crude futures turn positive after historic plunge, Brent falls

U.S. crude futures turn positive after historic plunge, Brent falls

Brent crude futures plunged 25% on Tuesday to the lowest in nearly two decades, a day after panicked traders sent U.S. oil below minus $40 per barrel on fears of a historic glut due to the destruction of fuel demand by the coronavirus pandemic.

Monday’s historic crash in U.S. crude futures saw the front-month May contract, which expires Tuesday, settling at negative $37.63 a barrel as traders facing a dearth of storage space and customers scrambled to avoid taking delivery of barrels.

While that trade was anomalous, the steep decline in Brent and U.S. futures expiring in June showed the market remained worried that the overwhelming supply and weak demand will persist for weeks.

Brent LCOc1 futures for June delivery fell $6.52, or 25.5%, to $19.05 a barrel by 12:46 p.m. EDT (1646 GMT), while U.S. West Texas Intermediate (WTI) crude CLc2 for June fell $9.09, or 44.5%, to $9.09.

Monday’s historic crash in U.S. crude futures saw the front-month May contract, which expires Tuesday, settling at negative $37.63 a barrel as traders facing a dearth of storage space and customers scrambled to avoid taking delivery of barrels.

While that trade was anomalous, the steep decline in Brent and U.S. futures expiring in June showed the market remained worried that the overwhelming supply and weak demand will persist for weeks.

Brent LCOc1 futures for June delivery fell $6.52, or 25.5%, to $19.05 a barrel by 12:46 p.m. EDT (1646 GMT), while U.S. West Texas Intermediate (WTI) crude CLc2 for June fell $9.09, or 44.5%, to $9.09.

“There is nothing to make energy traders believe that storage constraints, rising inventories, and demand concerns will be alleviated,” said Edward Moya, senior market analyst at OANDA in New York.

U.S. President Donald Trump called on the government to make funds available to the U.S. oil and gas industry, calling Monday’s crash a “financial squeeze” and mooting a halt to Saudi imports.

In Texas, however, oil and gas regulators declined to force producers to curtail oil output.

The Organization of the Petroleum Exporting Countries and its allies, including Russia, have announced sweeping cuts in production, amounting to almost 10% of global supplies. But with economies virtually at a standstill due to coronavirus lockdowns, demand is expected to drop as much as 30%.

Kremlin spokesman Dmitry Peskov said leading global oil producers could hold talks again to discuss their output deal further if needed.

Top oil exporter and de facto OPEC leader Saudi Arabia said it was ready to take extra measures to stabilize oil markets along with other producers.

U.S. crude inventories were expected to rise by about 16.1 million barrels in the week to April 17 after posting the biggest one-week build in history, analysts polled by Reuters said.

The American Petroleum Institute (API) is set to release its data at 4:30 p.m. (2030 GMT) on Tuesday.

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