Stock futures kicked off the overnight session slightly higher and June contracts for domestic crude oil recovered some losses after Monday’s sharp declines.
The regular session Monday marked a historic day in energy markets, with futures for domestic West Texas intermediate crude oil turning negative for the first time in history. May WTI futures (CL=F), which expire on Tuesday, settled at -$37.63 per barrel.
“This is not based necessarily on fundamentals, this is based on the opposite of a short squeeze, where there was a tremendous amount of people who still owned WTI, you might say why take it these days, and they had to get out,” Tom Kloza, OPIS global head of energy analysis, told Yahoo Finance Monday. “And when there’s the smell of distress in the nostrils of some of these sellers, they took advantage of it.”
“It’s probably more realistic to look at the prices for Brent,” Koza added. June futures for Brent crude oil, the international standard, settled above $25 per barrel on Monday. “I would not infer from this that you’re going to necessarily see gasoline or diesel or jet fuel prices dive by a similar amount. These are desperately trapped longs who could not get out of those positions today.”
More actively traded June futures for WTI (CLM20.NYM), which held above $20 per barrel during Monday’s session, rose 3% shortly after 6 p.m. ET.
Concerns that oil demand will stay depressed as the coronavirus pandemic wipes out global travel and other energy-heavy industries has pulled prices lower across global crude products. And these worries have now compounded with storage capacity concerns, with the price of stowing away barrels of unused oil exceeding the value of the commodity itself for producers.
Meanwhile, market participants continued to eye coronavirus developments, with the pandemic at the heart of the current weakness in the economy and financial markets. A lumpy economic reopening process has begun to emerge in individual states across the country, with some Southern states less hard-hit by the outbreak starting to allow some businesses and public spaces including beaches to come back online, with some restrictions.
In domestic hot spots – where prospects of easing social distancing standards are as yet less imminent – the trajectory of the coronavirus outbreak showed some encouraging signs of easing, according to public officials Monday. New York Governor Andrew Cuomo said new deaths in the state were 478, or the lowest single-day additions since the beginning of April, bringing the state-wide death toll to 14,347. The growth rate in new cases eased relative to recent weeks. In California, new deaths rose by 42, according to state Governor Gavin Newsom, bringing the state total to 1,208.
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Here were the main moves at the start of the overnight session for U.S. equity futures, as of 6:06 p.m. ET Monday evening:
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S&P 500 futures (ES=F): up 6.75 points, or +0.24% to 2,813.25
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Dow futures (YM=F): up 30 points, or +0.13% to 23,518.00
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Nasdaq futures (NQ=F): up 30.25 points, or +0.35% to 8,722.25
The bell used to open and close the markets hangs in front of an empty podium above the floor of the New York Stock Exchange (NYSE) as it prepares to close due to the coronavirus disease (COVID-19) outbreak in New York, U.S., March 20, 2020. REUTERS/Lucas Jackson TPX IMAGES OF THE DAY
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