U.S. Oil prices fell 9% on Tuesday, the worst day since mid-May. Decreased oil.1 $ .1. Fell to the level of Dr.Lar, which is the weakest level in almost three months. For the first time since the end of June, world benchmark Brent crude has fallen below $ 40.
“Demand is low,” said Robert Yaver, director of energy futures at Mizhoho Securities. The supply is on. “Existing economic laws on both sides of the spectrum are being violated.”
“It’s a double-blink warning signal,” Yavar said. “The OPEC community is in a panic today, sending a bad signal to the OPZ community.”
‘Avalanche of selling orders’
The latest upheaval in the oil market comes during a major upheaval in the stock market.
Jeff Wyle, an energy analyst at Newberger Burman, said oil was being caught in a risky trade. He added that “nothing has changed” in the basic supply / demand picture for oil “to warrant such a drop.”
Just as investors are hitting exits in tech stocks, they are not betting on crude oil.
“Everyone is trying to get out together. There’s an avalanche of selling orders,” said Mizuho’s Yawar.
Investors are also rushing into oil stocks.
Poor air travel makes demand disappointing
With this epidemic, the price war between Russia and Saudi Arabia, this spring oil prices skyrocketed. U.S. oil prices also turned negative for the first time in a short time, finally bottling at 40 40 a barrel.
The good news for oil bulls is that demand for gasoline has fallen sharply.
Road traffic is almost complete and Bank of America hopes that global oil demand will continue to grow positively year-over-year with the use of roads in the next few months. That helped lift the national average gasoline price to 2.22 a gallon lift, from a low of 7 1.77 at the end of April.
That’s why Bank of America warned in a report late last week that it would take three years for global oil demand to “normalize”.
“Global demand for oil is really sluggish,” said Michael Tran, managing director of global energy strategy at RBC Capital Markets. All the lesser fruits of global oil recovery have stalled.
When will the crude bottom?
Trun warned that fundamentals in the oil market are likely to “continue to weaken through the fall.”
So how low can crude go?
Yawar expects the crude bar not to go much lower than 30 barrels as OPEC will be rescued again at that time.
“I don’t think we’ll go to the abyss again like spring.”
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