West Texas Intermediate plummeted more than 14% to $10.95 during Asian trading hours Tuesday, accelerating earlier, dramatic declines. The US benchmark, of oil to be delivered in June, settled at $12.78 a barrel on Monday — a drop of more than 20%.
The announcement was yet another sign of how much the coronavirus pandemic has caused oil demand to evaporate, leaving the world without much room to store barrels of excess supply that aren’t being used.
“With the USO ETF due to continuing selling down its June WTI position for the rest of the week, nobody else who needs to, or wants to sell, is hanging around and waiting for them to do so,” wrote Jeffrey Halley, senior market analyst for Asia Pacific at Oanda, in a Tuesday research note. “That is an entirely sensible self-preservation strategy with the ability to stay alive trading oil markets in short supply these past two weeks.”
“The startling June sell-off is in part due to the reality of storage facilities filling up rapidly,” wrote Stephen Innes, chief global markets strategist at AxiCorp, in a Tuesday research note.
Brent crude also fell Tuesday. The global benchmark was last down 5% to $18.96 a barrel.