Oil plunges again as US erases early gains
Could benefit oil and gas interests
Brent crude oil plunged more than 12 per cent to below USD 17 a barrel on Wednesday even as the United States erased early gains and fell.
In another day of volatile trading, US benchmark WTI surged in early Asian deals while Brent also edged up on news that top producers had held talks -- only for prices to suddenly change course.
Consequently, Brent dropped 12.31 per cent to $16.98 a barrel, extending heavy losses from a day earlier. WTI for June delivery, which had rebounded about 20 per cent at the open, was down around 5 per cent at $11 a barrel in the afternoon.
Prices have plunged as lockdowns and travel restrictions introduced worldwide to stem the spread of the virus hammer demand.
On Monday, WTI for May delivery collapsed to an unprecedented low of minus $40.32 as traders scrambled to sell it before the contract expired Tuesday, but could find few buyers with storage capacity fast filling up.
Analysts said the morning bounce was driven by news that members of exporting group OPEC, as well as some allies in the OPEC+ grouping, held a teleconference Tuesday -- but grim reality soon returned to the markets.
US crude has been particularly hard-hit because of storage problems, as WTI is delivered at a single, inland point, although the sell-off has now spread to Brent.
The crisis was worsened by a price war between Saudi Arabia and Russia.