Oil prices are collapsing again as weak demand leaves producers hard to find anywhere to store crude.
A barrel of US crude oil to deliver in June only costs you $ 11.20 a barrel this morning, down $ 12.78 yesterday – and $ 60 in January.
Brent crude, the international benchmark, fell 4% to $ 19.20 – return to the lows of 21 reached last week. This moderates the mood in the markets today, after strong gains on Monday.
The liquidation fuels fears that US crude oil prices will fall below zero if suppliers despair of moving their stocks. Traders are nervously watching Cushing, Oklahoma – the hub of the US oil industry – for signs that its tanks are full to the brim.
As Harry Tchilinguirian, global oil strategist BNP Paribas in London, told the Reuters Global Oil Forum yesterday:
“The market is very concerned about a repetition of negative prices while the Cushing storage and delivery center is saturating”
The turmoil has already forced the world’s largest oil-backed exchange-traded fund to abandon all of its short-term contracts for oil delivery next month. The decision by the United States Oil Fund (known as the USO) lowered the price of oil in June, creating more volatility.
Kyle Rodda of IG Explain:
The US Oil Funds’ decision to dump all of its exposure to the previous month’s WTI Futures contract prompted further crude oil prices and further concern over global energy demand and supply capacity.
Oil problems are also due to anxiety over the global recession. There is less cheerful optimism about a Vin the shape of a recovery, more and more economists accepting that growth looks like U, a W, or even the dreaded L… ..
The new US retail sales figures, US trade and consumer confidence and the Spanish unemployment data expected today will help us see how the economy is doing.
- 8:00 a.m.BST: Spanish employment data for the first quarter of 2020
- 11:00 a.m. BST: survey of CBI’s distributive sales to UK retailers – expected to drop from -3 to -40
- 1:30 p.m. BST: US merchandise trade balance for March
- 3:00 p.m. BST: American consumer confidence index for April – should dip to 87.9 versus 120