U.S. crude oil bounced back into constructive territory Tuesday; however a historic drop below zero rattled investors and triggered the steepest slump in Asian stock markets in a month.
Merchants couldn’t give away West Texas Intermediate overnight after a storage squeeze turned holders of the contracts expiring later on Tuesday forced sellers.
A $39 climb leaves the price for May delivery at $1.38/barrel, and traders unnerved about further dislocation.
MSCI’s broadest index of Asia-Pacific shares outside Japan lost 2%, as did the Nikkei, EURO STOXX 50 futures and FTSE futures. E-mini futures for the S&P 500 dropped 0.5%, while bonds and the greenback rose.
The slump came along with more indicators of a sluggish and difficult recovery from the COVID-19 pandemic.
The World Health Organization warned that any lifting of bans to contain the spread of the novel coronavirus have to be gradual, and if restrictions had been to be relaxed too soon, there would be a resurgence of infections.
Hong Kong’s government stated it would extend restrictions aimed at tackling the coronavirus for another two weeks.
German Chancellor Angela Merkel cautioned consumers rushing to just-reopened shops that lockdown measures could be tightened again if fresh infections arise.
And in the U.S., a return to work is looking more and more chaotic, as some states relax lockdowns while others are urging caution faced demonstrators demanding an end to constraints.