FILE PHOTO: The sun is seen behind a crude oil pump jack in the Permian Basin in Loving County, Texas, U.S., November 22, 2019. REUTERS/Angus Mordant
SEOUL (Reuters) – U.S. crude oil jumped more than $20 per barrel on Tuesday but still traded below $0 after plunging into negative territory for the first time in history, dragged down by a supply glut and sagging demand for crude due to the coronavirus pandemic.
U.S. West Texas Intermediate (WTI) crude for May delivery was up $21.96 at -$15.67 a barrel by 2214 GMT after settling down at a discount of $37.63 a barrel in the previous session.
The May contract expires on Tuesday, while the June contract, which is more actively traded, was up 51 cents, or 2.5%, to $20.94 a barrel.
Oil prices have been under pressure as travel restrictions and lockdowns to contain the spread of the coronavirus curbed global fuel demand, leaving ample crude supplies hard to find places to store with demand down 30% worldwide.
The main U.S. storage hub in Cushing, Oklahoma, the delivery point for the U.S. West Texas Intermediate (WTI) contract, was expected to fill up in a matter of weeks.
“With storage facilities filling up fast, particularly at the WTI pricing point, Cushing, there are fears that there will be nowhere to store it,” ANZ Research said in a note.
Faced with a supply glut, the Organization of the Petroleum Exporting Countries (OPEC) and its allies including Russia, known as OPEC+, agreed to cut output by 9.7 million barrels per day (bpd) but that will take place from May.
“Not even the OPEC+ supply agreement is likely to stem the flow in selling in the short term,” ANZ Research added.
Reporting by Jane Chung in Seoul; Editing by Chris Reese and Matthew Lewis