NEW YORK, April 21 (Xinhua) -- The oil market experienced another wild session on Tuesday with the new front-month June contract for the U.S. benchmark falling more than 43 percent.
The West Texas Intermediate (WTI) for May delivery settled at 10.01 dollars a barrel on the New York Mercantile Exchange on Tuesday, its expiration day. Prices crashed to an unprecedented settlement of -37.63 U.S. dollars a barrel on Monday.
The negative territory implies that producers would pay buyers to take oil off their hands.
The June WTI plunged 43.37 percent to settle at 11.57 dollars a barrel on Tuesday, while Brent crude for June delivery dropped 24.4 percent to close at 19.33 dollars a barrel on the London ICE Futures Exchange.
A demand shock resulting from the coronavirus shutdowns raised concerns that oil storage capacity will quickly fill up, fueling volatility in crude prices, experts noted.
"West Texas crude settles physically, meaning those who own the contracts when they expire must take delivery. That's a problem, because it won't be easy to find a place to put it as storage is increasingly full and what remains is getting expensive," Chris Low, chief economist at FHN Financial, said in a note on Tuesday.
Global oil demand is expected to fall by a record 9.3 million barrels per day year on year in 2020, the International Energy Agency (IEA) warned in its closely-watched monthly report.
The IEA said demand in April is estimated to be 29 million barrels per day lower than a year ago, down to a level last seen in 1995, due to the COVID-19 pandemic as containment measures have brought mobility almost to a halt.