Singapore — 0218 GMT: Crude oil futures were lower in mid-morning trade in Asia Tuesday, extending the recent selloff, amid concerns of the lack of storage capacity.
At 10:18 am Singapore time (0218 GMT), ICE Brent June crude futures were down 87 cents/b (4.35%) from Monday's settle at $19.12/b, while the NYMEX June light sweet crude contract was $1.82/b (14.24%) lower at $10.96/b.
"WTI June futures can be seen slipping once again past $12/b into Tuesday Asia hours amid the more immediate concern with storage," IG market strategist Pan Jingyi said in a note.
"[But] watch for any further pullback of prices towards support seen just above $10/bbl, particularly with US inventory reports due into the week serving as event risks for further downward pressure," Pan added.
US crude futures settled sharply lower on Monday after the world's largest energy exchange-traded fund said it would exit its NYMEX June WTI contracts this week.
The United States Oil Fund announced Monday that it would shift its portfolio away from prompt-dated futures and invest more in contracts extending into 2021.
"The selling pressure is expected to continue from now till the end of April," OCBC analysts said in a note Tuesday.
"But the USO's diversification of its futures holdings means the probability of negative prices towards contract expiry due to the USO's rollover is reduced," the analysts added.
The steep contango between front and second month contracts had contributed to last Monday's selloff, which pushed WTI crude into negative territory for the first time in history.
Concerns over a lack of storage constraints have surfaced after oil demand plunged following the coronavirus outbreak, while supply cuts are seen as inadequate in balancing out the fall in demand.