Oil in London traded near a 21-year low as the global benchmark was sucked into the rout that sent U.S. futures below zero for the first time ever this week. Brent for June delivery slumped as much as 17%, before paring losses to trade near $19 a barrel. West Texas Intermediate crude fell 2.9% in New York, having lost almost half its value on Tuesday. Prices continue to slide amid fears that the massive glut that sent May WTI to as low as minus $40.32 on Monday is only going to get worse.
With global demand crushed by coronavirus lockdowns, concerns that the unwanted oil is going to overwhelm storage capacity have triggered a selling frenzy. Oil ministers from the OPEC+ coalition held an unscheduled conference call on Tuesday to discuss the rout, though a closing statement signaled they didn’t settle on any new policy measures.
The alliance agreed to slash production by about 10 million barrels a day earlier this month, but the cuts won’t kick in until May. Even then, they won’t be enough to balance out the demand destruction from the virus in the short term, which could be as high as 30 million barrels a day.