US oil futures end in green territory; OPEC discusses 'dramatic situation'

A day after its historic slide into negative territory amid a supply glut, US oil futures finished in positive territory Tuesday although the market remained under heavy pressure. Futures of US benchmark contract West Texas Intermediate for delivery in May ended at $10.01 a barrel after finishing Monday's session at -$37.63 a barrel.

But WTI futures for delivery in June plunged 43 per cent to $11.57 a barrel, the lowest ever since the contract was established in 1983.

Oil's chaotic collapse deepened, and stocks around the world dropped on Tuesday as the economic carnage caused by the coronavirus pandemic turns markets upside down.

The price of oil has plummeted because very few people are flying or driving, and factories have shut amid widespread stay-at-home orders. Global demand is set to drop this month to levels last seen in the mid 1990s. At the same time, oil producers can't slow their production fast enough, and all the extra crude going into storage is sending tanks close to their limits.

The Dow Jones Industrial Average fell 606 points, or 2.6 per cent, to 23,047, and the Nasdaq was down 3.2 per cent. The losses were widespread, and all 11 sectors that make up the S&P 500 were down.

In another sign of the worry washing over markets, Treasury yields fell further.

The yield on the 10-year Treasury dropped to 0.57 per cent from 0.62 per cent late Monday, meaning investors are willing to get paid even less to get the safety of owning a U.S. government bond. At the start of the year, before economies worldwide went on lockdown to slow the spread of the virus, investors were getting paid about 1.90 per cent to own a 10-year Treasury.

Trump pledges to support oil, gas industries amid oil futures crash

US President Donald Trump has directed his administration to work on a plan to get funding to the oil and gas industries as a steep sell-off in oil futures continued.

"We will never let the great US Oil & Gas Industry down," Trump tweeted on Tuesday morning, Xinhua reported.

"I have instructed the Secretary of Energy and Secretary of the Treasury to formulate a plan which will make funds available so that these very important companies and jobs will be secured long into the future!" Trump said.

The West Texas Intermediate (WTI) for May delivery shed $55.9, or over 305 per cent, to settle at -37.63 USD a barrel on the New York Mercantile Exchange, implying that producers would pay buyers to take oil off their hands.

The May contract managed to turn positive as of midday Tuesday. However, the most-active June contract for the US benchmark plunged more than 30 per cent to settle around $11.57 dollars a barrel.
 

OPEC ministers and allies discuss 'dramatic' oil situation

The OPEC alliance of oil producers said "several" member states, and some of its allies in the OPEC+ grouping, held a teleconference Tuesday to discuss the plunge in oil prices caused by the coronavirus pandemic.

The organisation tweeted that ministers held an "informal teleconference to brainstorm the current dramatic oil market situation" but it was not clear whether Saudi Arabia, OPEC's largest producer, took part.

A photo tweeted by the organisation appeared to show representatives from countries including Nigeria, Iraq and Venezuela taking part but there was no confirmation of which countries joined the meeting.

OPEC said the teleconference was held at the initiative of Mohamed Arkab, energy minister of Algeria, which currently holds OPEC's presidency.

A spokeswoman for Russian Energy Minister Alexander Novak said Russia -- viewed as the leader of the OPEC+ grouping -- did not take part. Novak said in a statement on Tuesday that there was no need to "dramatise" the current market situation.

"OPEC+ countries are carefully monitoring the situation and have all means to react, if need be," Novak said.