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Source: Arabic.net
Oil prices fell for the second day in a row on Tuesday amid fears that global crude storage capacity will decline and that recovery in fuel demand will come slowly as countries relax restrictions on activities and social life to contain the Corona pandemic.
The price of US West Texas Intermediate crude cut its losses to around 4%, rebounding from a low of $ 10 a barrel today. There was a decrease of 4.15% or $ 0.57 to $ 12.18 per barrel at 10 GMT. US crude oil fell 25% yesterday.
The main reason for these losses is due to the fact that the USO Fund, the largest ETF oil index fund, completely abandons the June contracts to buy other futures contracts in order to avoid price collapse again, as it happened in the previous contracts of May last Monday, which led to the widening of the price difference between the contracts of June and July. American mineral
Tariq Al-Rifai, CEO of the Corum Center for Strategic Studies, said in an interview with “Al-Arabiya” that the problem of the oil market is that it is not possible to determine the ratio of the balance of supply and demand in the future, with variable estimates of the demand deficit.
He noted that some investors started selling June contracts and replaced them by taking July contracts, so the $ 8 price difference between the two contracts highlights the difference that was not more than $ 1 in the past.
He attributed this behavior to “investors who expect US oil to repeat what it achieved in the May contracts.”
He stated that the demand for oil is equivalent to about 100 million barrels per day, while expectations indicate a decrease in demand of 15 million barrels per day, and there are expectations from the Energy Agency and energy exchange companies with a decrease in the quantity of demand of 35 million barrels per day.
He said that this large decrease in demand will not return quickly because the opening of the economies is still very simple and demand will not return quickly, and therefore the problem of storage arises.
He considered that with the resource of storing oil in tankers, the International Energy Agency expects 15% of supplies to be stored in tankers, indicating an average storage of 150 million barrels per day.
He warned that continuing current conditions will raise the amount of oil storage in tankers to 320 million barrels per day in the coming months.
He also noted a jump in the average daily cost, from storing oil in tankers from $ 10,000 a day to tankers last year, to 150,000 countries per day for tankers today.
And the world benchmark Brent index fell to $ 18.85 and in one of the transactions lost 4.3%, equivalent to 85 cents at $ 19.14 per barrel.
Benchmark crude lost 6.8% yesterday, and the June crude delivery contract ends on April 30.
The drop in oil prices in June delivery futures comes amid signs that global storage capacity is filling up rapidly, raising concerns that production cuts are not coming fast enough. to offset the collapse in demand from the entire Corona pandemic.
US crude oil inventories USA They rose to 518.6 million barrels in the week ending April 17, approaching a record high level of 535 million barrels recorded in 2017.
And trading in oil futures posted losses for the third consecutive week last week, and decreased in 8 of the previous nine weeks.
And 70% of storage capacity was filled at the Cushing Center, the West Texas crude oil delivery point, in the middle of April. Traders say the available energy is already rented.
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