Brent oil futures prices plunged overnight, extending oil market panic into a second day as the coronavirus pandemic has obliterated demand for fuel.

Monday and Tuesday have been two of the most turbulent days in the history of oil trading, as investors confronted the reality that worldwide supply will overwhelm demand for months or years and current production cuts to offset that glut are nowhere near sufficient. After Monday’s trade, when the front-month May US contract fell into negative territory for the first time in history, Tuesday set a new milestone as more than 2 million contracts for US crude for delivery in June changed hands, the busiest day in history, according to exchange operator CME Group. Brent futures for June delivery settled down 24 per cent to $US19.33 a barrel, their lowest since February 2002. US West Texas Intermediate (WTI) crude for June, the front-month contract as of Wednesday, fell $US8.86, or 43 per cent, to settle at $US11.57. The US May contract, which expired on Tuesday, rebounded from its deep dive into negative territory, rising to $US10.01 from the previous day’s settlement at minus $US37.63. Oil inventories have been building for weeks after Saudi Arabia and Russia early in March failed to come to terms on extending output cuts as the coronavirus pandemic worsened. Since that time, the pandemic’s spread has cut fuel demand by roughly 30 per cent worldwide. The Organisation of the Petroleum Exporting Countries and its allies, including Russia, finally announced sweeping cuts in production in early April, amounting to almost 10 per cent of global supplies. But with economies virtually at a standstill due to coronavirus lockdowns, that is not enough to offset the declining demand. Both Saudi Arabia and Russia said on Tuesday they were ready to take extra measures to stabilise oil markets along with other producers, but they have not taken action yet. “The math is pretty simple. Current oil production is about 90 million barrels per day, but demand is only 75 million barrels per day,” said Gregory Leo, chief investment officer and head of global wealth management at IDB Bank. Meanwhile, in Texas, however, oil and gas regulators declined to force producers to curtail oil output. The Texas Railroad Commission, which regulates energy companies in that state, had considered intervening in markets for the first time in nearly 50 years. “Texas punted their decision and with OPEC not showing any urgency, that pretty much means the world will run out of room to store oil by the second week of May,” said Edward Moya, senior market analyst at OANDA in New York. The main US storage hub in Cushing, Oklahoma, delivery point for WTI, is expected to be full within weeks. Official US government data shows that storage at Cushing was just 70 per cent full as of mid-April. Traders, however, said that whatever was left then has been spoken for by firms sending oil to the hub right now. US President Donald Trump 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. US crude inventories rose by 13.2 million barrels in the week to April 17 to 500 million barrels, data from industry group the American Petroleum Institute showed on Tuesday. Analysts had expected a build of 13.1 million barrels. Official government data is due to be released on Wednesday.

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