Global oil demand is expected to fall by a record 9.3 million barrels a day (b/d) year-on-year in 2020, the International Energy Agency (IEA) warned in its newly-released monthly report.
There are mitigating circumstances to these insane numbers.
U.S. benchmark West Texas Intermediate (WTI) for June delivery was up 4.61 percent to $17.26 a barrel in early trade, after settling 20 percent higher in NY overnight.
Traders are now more focused on the contract for June delivery, which had trading volumes more than 30 times higher. The June/July WTI spread rallied more than US$1 a barrel on the move.More news: Warehouse fire erupts at San Francisco’s Pier 45
Usually this process is relatively uncomplicated, but the May contract's decline reflects worries that too much supply could hit the markets, with shipments out of OPEC nations like Saudi Arabia booked in March set to cause a glut.
Commercial crude oil inventories in the USA rose by 15 million barrels, or 3%, to 518.6 million barrels for the week ending April 17, according to data released by the Energy Information Administration (EIA) on Wednesday.
Oil prices in the USA plunged to below zero on Monday as demand collapsed amid the coronavirus pandemic.
"Algeria also told OPEC it would be cutting immediately", the bank said in a note. "There's no place to put it - we're running out of space to store oil". WTI Midland in Texas - a flagship marker for the USA shale industry - was at -US$13.13 a barrel, while crude in Alaska was at -$US46.63.More news: Alberta reports two COVID-19 deaths, 32 cases
Traders scrambled to unload positions ahead of the contract's expiration, contributing to the historic drop, experts noted. Four weeks ago, the storage hub was half full - now it is 69% full, according to U.S. Energy Department data.
The Gulf is a major gateway for oil to reach worldwide markets, and spikes in US-Iran tensions typically drive prices higher.
Under a deal agreed between the Organization of the Petroleum Exporting Counties and other producers including Russian Federation and Azerbaijan, a grouping known as OPEC+, output cuts of 9.7 million barrels bpd should take effect from May.
USA exchange-traded funds are also playing a role in the action, analysts said.More news: The Locked Vaults in Call Of Duty Warzone are Opening