A public health crisis has meant countries around the world have effectively had to shut down, with many governments imposing draconian measures on the daily lives of hundreds of millions of people.
The restrictions have created an unprecedented demand shock in energy markets, ramping up the pressure on companies and governments reliant on crude sales.
To date, more than 787,000 people have contracted COVID-19 worldwide, with 37,829 deaths, according to data compiled by Johns Hopkins University.
International benchmark Brent crude traded at $23.36 a barrel Tuesday morning, up more than 2.6%, while U.S. West Texas Intermediate (WTI) stood at $21.26, more than 5.8% higher.
Brent futures fell to their lowest level in 18 years on Monday and WTI ended the previous session below $20, before both benchmarks pared some of their losses on the final trading day of the first quarter.
To date, Brent futures have fallen more than 65% through the first three months of 2020, putting the benchmark on track to register its worst quarter through our history
Brent is also on pace to record its worst-ever monthly performance, down over 54% in March alone.
Meanwhile, WTI futures slumped more than 67% for the first quarter, putting it on track for its worst-ever quarterly performance back to when the contract began trading in 1983.
WTI is also down over 55% month-to-date, on pace for its worst-ever monthly performance, too.
Storage capacity likely
to ‘hit its limit by midyear’
“Even if OPEC and other producers start restricting their output again soon, the supply overhang from the global lockdown is so big that storage capacity will likely hit its limit by midyear,” they added.
It has led to concerns of a supply surge from April 1, with Saudi Arabia and the United Arab Emirates both pledging to ramp up production.
Industry experts have warned that plans to ramp up production could prompt a wave of bankruptcies and investment cuts in the U.S.
On Monday, U.S. President Donald Trump and Russian President Vladimir Putin held talks to discuss Moscow’s ongoing oil price war with OPEC kingpin Saudi Arabia.
The Kremlin said Trump and Putin had agreed to have their top energy officials discuss stabilizing oil markets.
Trump had initially welcomed the declaration of a price war between Saudi Arabia and Russia, hailing lower oil prices as good news for U.S.