Benchmark Brent and US oil futures for June delivery plunged to around two-decade lows on Tuesday, a day after US May futures sank into negative territory for the first time in history as demand tumbled due to the coronavirus crisis.
Brent for June delivery, the front-month contract, fell to as low as $18.10, its lowest since November 2001. At 1400 GMT, it was down 20% at $20.47.
The June contract for US West Texas Intermediate (WTI) crude dropped 23.7% to $15.59, after hitting its lowest since 1999.
WTI for May delivery, a contract in which trading turnover is much lower ahead of its expiry later on Tuesday, rose to $1.30, after plunging below $0 for the first time ever on Monday and settling at negative $37.63 a barrel.
With the market oversupplied and storage facilities already brimming, holders of the May contract were in the unprecedented position of having to pay those taking the crude.
The main US storage hub in Cushing, Oklahoma, the delivery point for WTI is expected to be full within weeks.
US President Donald Trump on Tuesday called on the government to make funds available to the US oil and gas industry, calling Monday’s crash a “financial squeeze” and mooting a halt to Saudi imports.
OPEC 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 has dropped as much as 30%.
“With no more generous production cuts announced and as the last remaining storage facilities get filled to the top with oil, we can expect to see such huge swings in oil prices from now on,” Louise Dickson of consultancy Rystad Energy said.
“The mild daily changes in the oil price that we were used to some months ago may now become luxuries of another era.”
Kremlin spokesman Dmitry Peskov said on Tuesday 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 on Tuesday it was ready to take extra measures to stabilise oil markets along with other producers.
US 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, five analysts polled by Reuters found.
