International benchmark Brent crude traded at $17.41 per barrel on Wednesday morning, down more than 10%. The June contract for U.S. West Texas Intermediate shed all of its earlier gains to trade at $11.29 per barrel, around 2% lower. The July contract for WTI last traded below just above $19 per barrel.
At a time when the coronavirus crisis continues to crush global demand, the world is awash with oil and quickly running out of places to put it. Per Magnus Nysveen, senior partner and head of analysis at Rystad Energy, warned that the situation in the oil markets was going to get worse. “The world is running out of place to store the oil,” Nysveen told CNBC’s “Street Signs Asia” on Wednesday, adding that storage acts as “a kind of buffer.”
Global demand for oil has fallen dramatically, with major economies worldwide effectively frozen as a result of coronavirus-induced lockdowns imposed by authorities scrambling to contain the spread of the disease. Wednesday’s moves in oil followed recent sharp declines in the sector. The May contract for WTI, which expired Tuesday, plunged below zero for the first in history before clawing it’s way back into positive territory. The June WTI contract plunged more than 40% on Tuesday while international benchmark Brent dropped from levels above $24 per barrel.