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

 

Monday’s historic crash in US 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 US futures expiring in June showed the market remained worried that the overwhelming supply and weak demand will persist for weeks, the report said.

 

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

 

At their session lows, the Brent front-month fell to $18.10 a barrel, its lowest since December 2001, while the WTI second-month fell to $11, the lowest for that contract since December 1998.

 

WTI for May delivery, meanwhile, rebounded from its negative condition. It was trading at $4.80 a barrel, as most of open positions coming into this week were settled on Monday.

 

“With available storage in short supply, nobody wanted to hold a contract about to come due,” Konstantinos Venetis, senior economist at TS Lombard, an independent investment research provider, said in a note. “US shale producers are fast approaching the point where they will be forced to shut down operations.”

 

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, the report said.