LONDON, April 21 — Oil-price turmoil gripped traders once more today, a day after US crude futures crashed below zero for the first time, as the coronavirus crisis cripples global energy demand and worsens a vast supply glut.

The commodity rout also sent world equity markets spiralling lower, as investors fretted that the news could compound a deep global economic downturn that has been widely forecast as a result of the deadly Covid-19 outbreak.

In Tuesday trading, New York’s light sweet crude West Texas Intermediate for May delivery clawed back to minus US$3.91 per barrel.

WTI had yesterday collapsed to an unprecedented intra-day low of minus US$40.32, with producers paying clients to take it off their hands.

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This week’s massive sell-off came ahead of today’s expiry of the May contract. Most trading has moved to the June contract, which was down about 20 per cent at US$16.33 per barrel.

“Ever thought that it could be imaginable to see the price of US oil valued at less than a pizza? Or even a slice of pizza? How about for it to actually cost to sell US crude?” said Jameel Ahmad, head of currency strategy and market research at FXTM.

“All of this was previously thought to be unthinkable — but it became very real for traders as the price of US oil turned negative for the first time in history.”

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Negative prices mean traders must pay to find buyers to take physical possession of the oil — a job made near-impossible with the world’s storage capacity at bursting point.

Elsewhere today, European benchmark Brent North Sea oil for June delivery tumbled to an 18-year low at US$18.10 per barrel, before shooting back up to US$21.08 in volatile deals.

“The most simple explanation for negative oil prices is that... players are now paying buyers to take oil volumes away as the physical storage limit will be reached. And they are paying top dollar,” said Rystad Energy analyst Louise Dickson.

Oil markets have been ravaged this year after the pandemic was compounded by a price war between Saudi Arabia and Russia.

While the two massive oil producing nations have drawn a line under the dispute and agreed with other countries to slash output by almost 10 million barrels a day, that is not enough to offset the lack of demand.

Stock markets sink

Equity markets were meanwhile deep in the red today, having enjoyed a healthy couple of weeks thanks to massive stimulus measures and signs of an easing in the rate of new infections globally.

The losses came despite signs that the virus, which has infected almost 2.5 million people and killed 170,000, is easing as global lockdowns begin to take effect, allowing some countries to slowly return to normality.

Analysts warned the drop in stock markets could be an indication that the recent surge may have been too much too quick and another sell-off is possible.

The flight to safety was reflected in currency markets, where the haven-investment dollar rallied against high-yielding, riskier units.

Investors have also been spooked by US reports that North Korean leader Kim Jong Un had undergone cardiovascular surgery earlier this month and was in “grave danger”.

Key figures around 1200 GMT

West Texas Intermediate: UP at minus US$3.91 per barrel

Brent North Sea crude: DOWN 17.6 per cent at US$21.08 per barrel

London – FTSE 100: DOWN 2.2 per cent at 5,687.01 points

Frankfurt – DAX 30: DOWN 2.9 per cent at 10,364.42

Paris – CAC 40: DOWN 2.7 per cent at 4,408.48

Milan – FTSE MIB: DOWN 2.0 per cent at 16,729.45

Madrid – IBEX 35: DOWN 1.7 per cent at 6,714.90

EURO STOXX 50: DOWN 2.8 per cent at 2,828.99

Tokyo – Nikkei 225: DOWN 2.0 per cent at 19,280.78 (close)

Hong Kong – Hang Seng: DOWN 2.2 per cent at 23,793.55 (close)

Shanghai – Composite: DOWN 0.9 per cent at 2,827.01 (close)

New York – Dow: DOWN 2.4 per cent at 23,650.44 (close)

Euro/dollar: DOWN at US$1.0840 from US$1.0862 at 2100 GMT

Dollar/yen: DOWN at 107.34 yen from 107.62

Pound/dollar: DOWN at US$1.2374 from US$1.2442

Euro/pound: UP at 87.62 pence from 87.30 pence

— AFP