Countries including the United States and Canada, along with nations in Europe and Asia, are taking unprecedented steps to contain the virus, which has already killed 7,500 people. Numerous governments have told residents to restrict their movements while businesses shutter, curbing demand for fuels.
West Texas Intermediate (WTI) crude
"You're getting new demand destruction news coming at you every hour," said John Kilduff, a partner at Again Capital Management in New York.
Amid the loss of demand because of the pandemic, Saudi Arabia and Russia remain embroiled in a price war that erupted after the two top producers failed to agree to extend supply curbs to support the market.
The Saudi energy ministry said on Tuesday that the kingdom's crude exports are set to rise in coming months to more than 10 million barrels per day, as it plans to use more gas for power rather than burning crude.
Brent's premium over WTI
Brent, the international benchmark, reacts more to supply from non-U.S. producers, so the anticipated increase in output from Saudi Arabia and Russia has hit that benchmark harder than WTI.
When that premium - also known as the arbitrage - narrows, U.S. exports become less attractive because of the cost of shipping them.
"Lower priced Brent will be attracting additional cargoes towards Europe while the comparatively high priced WTI will be enticing imports into the U.S. while at the same time, curtailing export activity as the Saudis attempt to re-gain some long lost market share," said Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois, in a report.
The United States has said it will take advantage of low oil prices to fill its Strategic Petroleum Reserve (SPR). Other countries and companies are planning similar measures to fill storage tanks.
Rates to store oil at the world's main trading hubs from Japan to South Africa and the United States are surging as millions of unconsumed barrels of oil hit the market daily.
Attention will focus on weekly U.S. inventory reports that are expected to show crude inventories rising for an eighth straight week. The American Petroleum Institute releases its supply report at 3:30 p.m. EDT (2030 GMT), with U.S. Energy Department figures due to be published on Wednesday. [EIA/S]