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Low oil demand after the corona crisis halted operations worldwide caused a drop in the price of US WTI oil. USA It will be delivered in May.
Buyers who fulfilled delivery contracts and were unable to receive oil because all stocks are full paid to get rid of the order and the price of a barrel of oil dropped to zero for the first time in history, down to the barrel of – 40 dollars.
– They were surprised that stocks were replenished at such a rapid rate and feared that the delivery they receive in May cannot be stored. Otherwise, they could have made easy money storing it for a month and selling it in June, as June’s oil price is just over $ 20 a barrel, says commodities analyst Christian Kopfer at Nordea Bank.
Part of the explanation of the surplus. Oil is reduced economic activity, another that there is a chicken run among oil producers. Nobody wants to be the first to tighten the crane, everyone expects a competitor to double first and that you must be alone. Therefore, they continue to pump oil, even though it is a loss business. What determines the career is the financial muscle, how long can the company return without going bankrupt.
– This is a hungry fox game between producers. But at this level, and even if the price of oil were $ 20-30 in the month of June, we will see a huge blow to oil producers if the situation persists for six months, says Christian Kopfer.
Various ways of producing oil are no longer profitable at the current price of oil, such as deep-water drilling and oil shale mining.
Christian Kopfer believes it The current imbalance between oil overproduction and extremely low demand will balance, but it will take a couple of months.
The US state USA It can handle some of the surplus oil, according to Donald Trump.
Photo: Mandel Ngan / AFP
Meanwhile, the United States is struggling with the problem of storing oil. The Cushing US oil center in Oklaholma, where WTI oil is delivered and stored in giant tanks for later transportation to refineries and power companies, is overloaded and soon has full capacity in all tanks.
Donald Trump said Monday at a press conference that the US state. USA You could possibly handle some of the surplus oil and store it in your oil reserve. The reserve contains 70 million barrels of oil. However, it is not a very long-term solution, according to Christian Kopfer.
– Overproduction is 20-30 million barrels per day, it would be complete in three days, he says.
Where the oil should go, then it is not clear. According to what Trump stated at the press conference, Russia, Mexico and the OPEC countries are tightening the oil cranes now.
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