Prompt WTI crude futures back in positive territory after historic negative settle overnight

Singapore — 0230GMT: The front-month May NYMEX WTI contract rebounded back into positive single digits during mid-morning trade in Asia on Tuesday, after the contract settled in negative territory for the first time ever overnight Monday.

At 10:30 am Singapore time (0230 GMT), the NYMEX May light sweet crude contract climbed $39.30/b higher from Monday's settle to $1.67/b.

The contract plunged into negative territory overnight for the first time ever, amid a lack of storage capacity which forced traders to exit positions ahead of the expiry of the contract later Tuesday. It had settled at minus $37.63/b, down 55.90/b from last Friday. The previous record low front-month settlement was on March 31, 1986 at $10.42/b.

"Few had likely expected the fire sale for crude oil to head into negative territory at the start of the week, but that had been the fresh reality the market has had to grapple with," IG market strategist Pan Jingyi said in a note Tuesday.

Traders have been shifting out of the May contract and into the forward months since the beginning of April. The more actively traded June NYMEX WTI contract was $1.06/b higher at $21.49/b as of 0230 GMT.

"The risks persist towards the downside as storage concerns keep its grip on the market seeing that the June contract is the candidate to break the $21/b support at present," Pan said.

"The takeaway here is perhaps the fact that the demand picture had perhaps never been as bleak," she added.

The backdrop of weakening demand coupled with growing supply has pressured crude oil prices in recent weeks.

"The weak physical prices continue to reflect the underlying market fundamentals, which have been under pressure amid the collapse in oil demand [and] amid travel restrictions around the world," ANZ analysts said in a note Tuesday.

"Not even the OPEC+ supply agreement is likely to stem the flow in selling in the short term," the analysts added.

Meanwhile, ICE Brent June crude futures was 7 cent/b higher from Monday's settle at $25.50/b as of 0230 GMT.

Nonetheless, the supply outlook remains bearish amid concerns of growing US supply builds.

Analysts surveyed by Platts on Monday were expecting US commercial crude inventories to have increased nearly 13 million barrels in the week ended April 17. Market participants will keep a lookout for inventory data from the American Petroleum Institute later Tuesday, and Energy Information Administration on Wednesday.