México

Guyana

Trinidad
& Tobago




Very usefull links



PW
Bookstore





Institutional
links


OPEC
\





 




PW
Business Partners

 


IRAQ OIL
THE FORUM

 


Blogspots

FxHQ Forex News

The Global Barrel

Tiempo Cultural

Gustavo Coronel

Iran Watch.org

Le Blog des
Energies Nouvelles

News Links

AP

AFP

Aljazeera

Dow Jones

Oil price

Reuters

Bloomberg

Views and News
from
Norway

 

 

 

PW ISSUES....
Inside, confidential and off the record

 

 

 

WTI crashes below $0

 


Lest's note, from march 6th... the Tuesday before the OPEC+ meeting debacle in Vienna... through March 31st, the net length by CTC non-reportables (small speculators, aka doctors and lawyers) balooned 492% from 8,570 futures-and-options contracts to the eighth most bullish position ever, 52,564 contracts. Therefore, small speculators share of the market's length ballooned from 2% to 11%! As of last Tuesday, these specs were still holding more that 11,000 contracts of net length... From The Schork Report, April 21, 2020

 

U.S. oil benchmark crashes below $0 a barrel to mark historic plunge

The soon-to-expire May contract for the U.S. oil benchmark marked history on Monday, finishing deeply in negative territory and implying that investors will need to pay buyers to take delivery of crude oil, reflecting a growing glut of crude and a lack of storage space.

West Texas Intermediate crude for May delivery CLK20, +98.16% CL.1, +98.16% finished down $55.90, or 306%, at negative $37.63 a barrel. The May contract expires on Tuesday.

The one-day plunge is the largest on record going back to 1983, and also the lowest level for a contract on record, according to Dow Jones Market Data.

The unprecedented drop in the nearby contract reflects traders scrambling to exit long positions that would require them to take physical delivery of crude amid dwindling storage space. It also reflects a convergence with the physical spot price for oil.

Read: Why oil prices just crashed into negative territory — 4 things investors need to know

“It's like trying to explain something that is unprecedented and seemingly unreal!,” wrote Louise Dickson, oil markets analyst Louise at Rystad Energy, in emailed comments.

“The most simple explanation for negative oil prices is that midstream players are now paying ‘buyers' to take oil volumes away as the physical storage limit will be reached. And they are paying top dollar!” the analyst said.

The June contract CLM20, 1.42% , which is the most actively traded, ended down $4.60, or 18.3%, at $20.03 a barrel.

“The collapse…is mostly a reflection of traders rolling contracts to June as no one wants to take delivery because storage capacity is getting close to being reached,” said Edward Moya, senior market analyst at Oanda, in a note.

The ever-widening discount for May versus the June contract reflects “all the bearish supply and demand drivers that remain permanently in place,” he said.

“While we are probably setting the stage for a significant bottom in oil, it does not matter for the May futures contract that will be delivered into a nightmarish bearish situation,” said Phil Flynn, market analyst at Price Futures Group, in a note. “Not only has demand ground to a standstill, the impact of oil cuts from OPEC+ also will not start in time for the current delivery.”

The trading action comes after the May contract posted a 19.7% weekly loss on Friday.

WTI contracts for later delivery have traded at much higher prices than the front-month May contracts. The steep upward slope for prices in later months in crude, a condition known as contango , underlines the dearth of storage of crude in recent weeks as the coronavirus wreaks havoc on global demand for oil.

The expiration of the May contract and the fundamental demand problems have combined to put outsize pressures on the energy sector.

“Price discovery is complicated, more so than usual, by the soon-to-expire WTI NYMEX front-month contract for May 2020,” wrote Stephen Innes, global chief market strategist at AxiCorp, in a Sunday research note.

“Even more so as the near-term prices are trading massively discounted due to storage premiums getting packed in the far dates, creating very squeezy conditions on the expiring contract as final day settlement (FDS) looms,” he wrote.

Monthly reports from the Organization of the Petroleum Exporting Countries and the International Energy Agency have underscored a period of flagging appetite for crude, even as major oil producers have forged a historic pact to curb output by some 10 million barrels a day , in an effort to end a price war between Saudi Arabia and Russia and stabilize prices that have been swooning.

In addition to OPEC and its allies trimming production, there is also the possibility on April 21 that the Railroad Commission of Texas, which regulates the oil-and-gas industry in the state, could move to limit output in the region.

Reports have also suggested that the Trump administration may provide further incentive by offering to pay producers to keep crude in the ground.

Meanwhile, Brent crude for June delivery BRNM20, -5.51% the international benchmark, finished down $2.51, or 8.94%, at $25.57 a barrel, after falling 10.8% last week. Brent is more seaborne than WTI, which is often moved via pipelines, is somewhat less constrained by immediate storage worries.

In other energy trading, May gasoline RBK20, -5.49% lost 4.24 cents, or 6%, to end at 66.83 cents a gallon, while June heating oil HOM20, -1.87% shed 6.85 cents, or 7.2,%, to close at 88.78 cents a gallon.

May natural-gas futures NGK20, -1.09% , meanwhile, gained 17.10 cents, or 9.75, to $1.9240 per million British thermal units

 

William Watts and Mark DeCambre / Market Watch / April 20, 2020

Original article


PW ISSUES.... 04/21/2020

Inside, confidential and off the record

Is an independent journalist effort from Petroleumworld, on Inside, Confidential and Off The Record Information, the views are not necessarily those of Petroleumworld

Follow us in : twitter / Facebook

Send this story to a friend Copyright© 1999-2020. Petroleumworld or respective author or news agency. All rights reserved.

We welcome the use of Petroleumworld™ stories by anyone provided it mentions Petroleumworld.com as the source. Other stories you have to get authorization by its authors.Internet web links to http://www.petroleumworld.com are appreciated.

 

Petroleumworld welcomes your feedback and comments, share your thoughts on this article, your feedback is important to us!

We invite all our readers to share with us
their views and comments about this article.

Write to editor@petroleumworld.com

 

By using this link, you agree to allow PW
to publish your comments on our letters page.

 

Petroleumworld.com

Hit your target - Advertise with us



Any question or suggestions,
please write to: editor@petroleumworld.com

 

Best Viewed with IE 5.01+ Windows NT 4.0, '95,
'98,ME,XP, Vista, Windows 7,8,10 +/ 800x600 pixels





 

 

TOP

Contact: editor@petroleumworld.com/Telephone:(58 414) 276 3041

Editor:
Elio Ohep.

Director & Producer: Elio Ohep

Contact: editor@petroleumworld.com

Advertising:Malena Vasquez:58 412 952 5301

Technorati Profile

PW in Top 100 Energy Sites


CopyRight ©1999- 2020, Petroleumworld ™  / Elio Ohep- All rights reserved

Legal Information This site is a public free site and it contains copyrighted material the use of which has not always been specifically authorized by the copyright owner.
We are making such material available in our efforts to advance understanding of business, environmental, political, human rights, economic, democracy, scientific, and social justice issues, etc. We believe this constitutes a 'fair use' of any such copyrighted material as provided for in section 107 of the US Copyright Law. In accordance with Title 17 U.S.C. Section 107, the material on this site is distributed without profit to those who have chosen to view the included information for research, information, and educational purposes. For more information go to: http://www.law.cornell.edu/uscode/17/107.shtml. If you wish to use copyrighted material from this site for purposes of your own that go beyond 'fair use', you must obtain permission from Petroleumworld or the copyright owner of the material.Internet Web links to http://www.petroleumworld.com are apreciated.

 

Petroleumworld no se hace responsable por los juicios de valor emitidos por esta publicacion, por sus colaboradores y columnistas de opinión y análisis. Aceptamos colaboraciones previa evaluación por nuestro equipo editorial, estamos abiertos a todo tipo o corriente de opiniones, siempre y cuando a nuestro juicio esten dentro de valores éticos y morales razonables. Petroleumworld alienta a las personas a reproducir, reimprimir, y divulgar a través de los medios audiovisuales e Internet, los comentarios editoriales y de opinión de Petroleumworld, siempre y cuando esa reproducción identifique a la fuente original, http://www.petroleumworld.com y se haga dentro de el uso normal (fair use) de la doctrina de la sección 107 de la Ley de derechos de autor de los Estados Unidos de Norteamérica (US Copyright) Internet Web links hacia http://www.petroleumworld.com son apreciadas.

.