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By Sharon Cho and Alex Longley in 04/28/2020
SINGAPORE (Bloomberg) – Crude released about $ 11 a barrel after a major index tracked by billions of dollars in funds rescued from short-term contracts for fear that prices could again turn negative.
June futures fell as much as 21% in New York before reducing some of the decline to trade 8.8% lower. S&P Dow Jones said it will extend all of its West Texas Intermediate contracts from June to July on Tuesday, due to the risk that the closest contract will be negative. Crude for July rose as much as 9% to $ 19.66.
The United States Oil Fund LP is also selling all of its June WTI contracts, while other ETFs have said they will exit the contracts in the short term and buy later.
Oil has fallen about 80% this year as the coronavirus outbreak vaporized demand for everything from gasoline to crude. The world’s largest producers have pledged to cut daily production starting next month to balance the market, but the collapse of consumption has led to increased inflation that is testing storage limits worldwide. US producers have begun delivering crude to the nation’s emergency reserves as trade space runs out.
“ETF stocks have added volatility,” said Paul Horsnell, head of commodity strategy at Standard Chartered. “This is the most extreme stress he’s ever suffered,” he said, referring to WTI prices.
Prices:
- June WTI fell $ 1.08 to $ 11.70 a barrel at 11:40 a.m. London time. It previously fell to a low of $ 10.07.
- Brent for the same month earned 51 cents at $ 20.50.
- Old-fashioned Brent, a benchmark for nearly two-thirds of the world’s physical crude, fell to $ 13.62 on Monday, from $ 16.01 on Friday, according to traders who monitor S&P Global Platts prices.
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