Investor attention was fixed on energy markets, a day after futures for domestic West Texas intermediate crude oil turned negative for the first time in history. May WTI futures (CL=F), which expired on Tuesday, settled at $10.01 per barrel, after settling at -$37.63 per barrel on Monday.
“While this move is symptomatic of an unprecedented oil surplus testing storage capacity, such a dramatic one-day price collapse owes entirely to the binding constraints of trading commodity futures into expiration,” Goldman Sachs analyst Damien Courvalin wrote in a note Monday evening.
The sell-off extended into the more actively traded June futures for WTI (CLM20.NYM), which sank more than 40% to around $11 per barrel Tuesday, after holding above $20 per barrel during Monday’s session. And the forward futures contract for Brent crude (BZ=F), the international standard, sank 27% to below $20 per barrel.
Concerns that oil demand will stay depressed as the coronavirus pandemic wipes out global travel and other energy-heavy industries have 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.
“With ultimately a finite amount of storage left to fill, production will soon need to fall sizably to bring the market into balance, finally setting the stage for higher prices once demand gradually recovers,” Courvalin said. “This inflection will play out in a matter of weeks, not months, with the market likely forced to balance before June.”
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.
—
2:41 p.m. ET: May WTI crude oil futures settle at $10.01 per barrel, June futures slide
May West Texas intermediate crude oil futures, which expired today, settled at $10.01 per barrel. The contract recovered some losses after diving into negative territory on Monday for the first time on record.
June futures, however, extended declines, sliding more than 40% as of Tuesday afternoon. The more actively traded contract briefly dipped below $10 per barrel before recovering.
Crude (CL=F): +$46.69 (+124.08%) to $9.06 a barrel
Gold (GC=F): -$10.60 (-0.62%) to $1,700.60 per ounce
10-year Treasury (^TNX): -5.5 bps to yield 0.5710%
—
10:05 a.m. ET: Trump vows to backstop U.S. producers walloped by oil collapse
President Donald Trump said the administration was working on a plan to make money available to the oil industry to prevent the loss of jobs after prices plunged below zero. “We will never let the great U.S. Oil & Gas Industry down,” Trump said in a tweet on Tuesday.
—
10:00 a.m. ET: Existing home sales drop the most in five years in March
U.S. sales of previously owned homes plunged by 8.5% in March over the prior month, representing the largest monthly decline since November 2015, according to a National Association of Realtors report. This followed a 6.3% rise in existing home sales in February over the prior month.
The drop brought existing home sales to an annualized 5.27 million, down from 5.76 million in February.
Consensus economists had forecast a decline of 9% for existing home sales in March, according to Bloomberg data, although these estimates spanned a wide range amid uncertainty over the impacts from the coronavirus pandemic.
—
9:31 a.m. ET: Stocks open lower as energy selloff continues
Here were the main moves in markets, as of 9:31 a.m. ET:
S&P 500 (^GSPC): -47.59 points (-1.69%) to 2,775.57
7:23 a.m. ET: Coca-Cola says COVID-19 will inflict ‘material’ impact on 2Q results
Coca-Cola (KO) highlighted an uncertain outlook for the current quarter due to the coronavirus outbreak in its earnings report Tuesday morning.
Since the beginning of April, the company has “experienced a volume decline globally of approximately 25%, with nearly all of that decline coming in away-from-home channels.”
“The ultimate impact on the second quarter and full year 2020 is unknown at this time, as it will depend heavily on the duration of social distancing and shelter-in-place mandates, as well as the substance and pace of macroeconomic recovery,” Coca-Cola said in a statement. “However, the impact to the second quarter will be material.”
Coca-Cola added it expects that the damage to the business will be “temporary,” and that conditions will improve in the second half of the year. The company had pulled its full-year guidance in mid-March.
The beverage giant delivered first-quarter results that topped consensus expectations on the top and bottom lines, with net sales of $8.6 billion versus the $8.25 billion anticipated. Diluted earnings per share of 51 cents topped estimates by seven cents.
—
7:13 a.m. ET Tuesday: Stock futures slide into the red as oil prices sell off again
Here were the main moves in markets, as of 7:13 a.m. ET Tuesday morning:
S&P 500 futures (ES=F): down 36.25 points, or -1.29% to 2,770.25
Dow futures (YM=F): down 406 points, or -1.73% to 23,082.00
Nasdaq futures (NQ=F): down 62.5 points, or -0.72% to 8,629.5
Crude May contract (CL=F): trading at 1 cent per barrel
Gold (GC=F): -$23.50 (-1.37%) to $1,687.70 per ounce
6:03 p.m. ET Monday: Stock futures open slightly higher
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:
S&P 500 futures (ES=F): up 6.75 points, or +0.24% to 2,813.25
Dow futures (YM=F): up 30 points, or +0.13% to 23,518.00
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
