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The price of WTI oil fell, even below 0 VND on the night of April 20, which is not representative of the world price of oil, so the national price of gasoline is not greatly affected by this abnormal factor.
Nature of WTI oil
The WTI oil price stands for “West Texas Intermediate,” which is the crude oil produced in the United States. It is also known as “Texas sweet light crude.”
WTI crude oil prices delivered in May on the night of April 20 (Vietnam time) fell unprecedented in history, dropping hundreds of percent to negative levels. At some point, the price of WTI crude fell to minus $ 40 / barrel. At the time of closing the market on April 20, WTI crude delivered in May closed at a negative price of $ 37.63 / barrel.
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| WTI oil price is below $ 0 / barrel, not reflecting national gasoline price |
Currently, crude oil trading in the market consists of 3 types: the futures market, the options market and the spot market. The negative oil price of more than 37 USD as above belongs to the futures market, it is the price of the futures contract in May and from the night of 20/4 it is the expiration date.
It is a price that reflects that supply is exceeding demand. Investors estimate that if they receive assets in May, the possibility that the US will USA Do not dismantle the order of social isolation, still restrict travel, consumption continues to decline sharply, with no signs of recovery. At that time, demand was much lower than supply. This stock does not have storage space, while the 21/4 must end the contract.
Speaking to the journalist, an oil expert explained: “If the contract is not finalized, the buyer must make the actual payment, the actual purchase. As such, there will have to be delivery operations. Meanwhile, delivery is very difficult, additional cost. Therefore, the seller must pay the buyer money, let the buyer pay, settle this contract, so that the seller no longer has to deliver and deliver the goods.
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“In fact, the price (-) $ 37.63 / barrel is the price traded between traders on the exchange rather than the price between the crude oil producer and the end user (refinery).) The amount of oil traded at (- ) 37.63 USD / barrel is very low, registering a volume of around 600 thousand barrels, “said the representative of PVN. |
The representative of the Vietnam Oil and Gas Group said: April 21 is the closing date of the delivery deadline in May 2020. On this day, the buyer of this contract must make the decision whether or not to accept this batch of oil. If they receive it, they must close the contract and they will receive the batch of material. However, with the sharp decline in global oil demand due to the current Covid-19 epidemic, crude oil is still produced while the reservoirs are not full and storage is either impossible or at a very high cost. .
Therefore, some owners of this contract have decided to “sell” at all prices in the last 2 seconds of the session and the corresponding price in these last 2 seconds is considered the closing price.
Similarly, Mr. Nguyen Quang Dung, Deputy Director General of the Vietnam Oil and Gas Group, said: The reason why the price of WTI oil fell to a record on Monday due to the sale of future contracts was will expire on Tuesday. (April, the 21st). When the contract expires, the buyer will need to receive 1,000 barrels of oil for each contract they have signed and delivered to Cushing, Oklahoma, USA. USA This is a major oil warehouse in the United States.
However, according to Nguyen Quang Dung, inventories in Cushing are growing faster than companies expect. Last week, the warehouse had 70% capacity and is expected to be full in two weeks. Because neither the buyer nor the crude oil store could be found, those who bought the futures had to sell at all costs when the contract expired.
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| Domestic gasoline prices are not affected by WTI oil prices. |
No impact on national gasoline prices.
As soon as the world price of WTI on the night of April 20 fell below 0 dong, closing at minus $ 37.63 / barrel, many people thought the possibility of the domestic gasoline price dropping further. But the reality is different.
The past WTI oil price is not an indicator that the domestic price of gasoline will have a chance to drop sharply. In other words, Vietnam’s oil price or gasoline price is not affected by the US WTI oil price. USA
Until now, Vietnam’s oil prices have been based on Brent oil prices to determine sales prices. On 4/21, the price of Brent oil on the market is still trading at over $ 25 / barrel, the price is quite low.
Currently, two national refineries, Dung Quat and Nghi Son, represent 70-80% of domestic demand. The Dung Quat Oil Refinery processes good quality crude oil from the Bach Ho field and other domestic fields such as Rong, Chim Sao, Dai Hung with a small amount of imported oil. The Nghi Son refinery also processes imported crude from Kuwait.
Therefore, it is not possible to lower oil prices from the US WTI. USA On April 21 to apply them to domestic oil prices, nor wait for the sharp drop in national gasoline prices.
On the other hand, the price of WTI oil does not directly affect the prices of products in Singapore, while domestic gasoline prices use reference prices from the Singapore market. Therefore, the fluctuation in the price of WTI oil mentioned above does not affect much the domestic price of gasoline. However, in the near future, if demand does not improve, the disease has not been delayed, the price of gasoline will continue to be low.
Luong Bang
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