[ad_1]
You never saw something like that. The barrel of oil sank to negative values in trade in New York, according to Reuters and Bloomberg. Producers are paying buyers to get rid of the oil. that will not drain in May.
The sharp drop in demand, due to the pandemic, left the market “flooded” with oil. AND the news that the United States was running out of storage capacity did the rest. Bloomberg’s chart is illuminating.
Source: Bloomberg
At stake are the oil deliveries to be made in May, with the West Texas Intermediate (WTI), which serves as a benchmark for US crude prices. US, hitting at least $ 37 negative, a $ 55 drop, according to Bloomberg
On the other hand, the price of a barrel of Brent oil, which serves as a reference for Portugal, fell much more smoothly, reaching $ 25.88 (positive) per barrel, a drop of two dollars (-7.83%).
Source: Bloomberg
However, in the case of June deliveries, the price is at a much higher level (albeit historically low), with a barrel of oil in New York worth $ 21.60. The difference between May and June is also, according to Reuters, the largest in history between two-month contracts in a row.
“It is a historic day. What it means is that there is no more storage available and therefore the price of the goods is effectively useless, “says Bob Yanger, an expert at investment bank Mizuho, speaking to Reuters.”Since there is no place to put it, you basically have to dump. They dont want it. So when it’s less than a dollar, they pay a dollar to get it out, ”says Yanger, who is surprised, in any case, that the storage capacity has been exhausted, taking into account the latest available data.
John Kilduff of Again Capital LCC, also quoted by Reuters, explains that “Under normal conditions, this would be a stimulus for the world economy: it would mean a 2% increase in GDP“Only the savings are not seen” because nobody spends fuel“But” obviously, it’s terrible for producers“About oil,” says the analyst, who does not expect a very different scenario in contracts the following month. “The June contract is not going to be better. There is no possibility of releasing the stock ”.
The problem, says Louise Dickson, an analyst at Rystad Energy, is a reflection of market inconsistencies in these pandemic times. “This moment is obviously historical and could not better illustrate the utopia of the market price since March, when the whole problem of oversupply began to become apparent, but the market continued without realizing it“Defend the specialist.
The crisis was exacerbated after Saudi Arabia, the informal leader of the Organization of Petroleum Exporting Countries (OPEC), decided to switch to a price guerrilla with Russia, which does not belong to the organization. The two countries ended up reaching a truce earlier this month, deciding to cut production by around ten million barrels per day. However, given the inability to store, prices continued to drop sharply.
Article updated at 20:30.
