US oil prices rebound above zero after coronavirus-triggered record collapse

In this file photo the Marathon Refinery is seen in Carson, California, on March 9, 2020. (AFP)

US oil prices rebounded back above zero Tuesday, a day after futures ended in negative territory for the first time as a coronavirus-triggered collapse in demand leaves the world awash in crude.

US benchmark West Texas Intermediate for May delivery was changing hands at $0.56 a barrel after closing at -$37.63 in New York.

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Space is scarce to store oil amid the current glut, meaning there have been few buyers for the commodity.

The May WTI contract closes Tuesday, and the contract for June delivery is now more actively traded. That enjoyed a modest increase Tuesday after heavy falls a day earlier, rising to above $21 a barrel.

Oil prices have plunged as the coronavirus continues to infect more people globally, prompting stay-at-home directives and travel bans that have led to a collapse in consumption. The breakdown of the OPEC+ alliance in early March compounded the situation, while the subsequent output-cut agreement proved too little and too late in the face of a one-third collapse in global demand. With no end in sight, and producers around the world continuing to pump, that’s causing a fire-sale among traders who don’t have access to storage.

“The May crude oil contract is going out not with a whimper, but a primal scream, said Daniel Yergin, a Pulitzer Prize-winning oil historian and vice chairman of IHS Markit Ltd.

(With inputs from Bloomberg)

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Last Update: Wednesday, 20 May 2020 KSA 14:07 - GMT 11:07
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