West Texas Oil May Futures Contract it has sunk 305%, down to -37.63 dollars a barrel, Before his imminent expiration, scheduled for this Tuesday. Meanwhile, the future of june listed on 20 dollars, when falling by 12%, when it is normal for the future of the following month to trade between 50 cents and $ 1 above. The crude Brent, benchmark in Europe, falls 6% to $ 26.30.
Normally, the difference in price between the imminent expiration of a contract and that of the following month, denominated in specialized slang 'contango', does not usually exceed the dollar.
However, the exceptional situation in EEUU, with the paralyzed economy and the oil storage capacity to the limit, have caused this totally unusual movement in the market, also fueled by bearish positions and the rolo (transfer) of operators towards the June contract.
Most investors are already focusing on the June contract, which has reduced trading volume and increased volatility About the May contract, explained Giovanni Staunovo, an analyst at UBS, according to CNN.
During last week, and after OPEC + agreed, on Friday, April 10, a historical cut in production of 9.7 million barrels per day, West Texas fell more than 20% and Brent 13%. West Texas' biggest decline is explained by the American shale producers, through the fracking technique, have not reduced production as significantly as OPEC +.
With demand nearly paralyzed by the coronavirus, the volume of oil stored in the United States, especially in Cushing, Oklahoma, is increasing and the facilities are about to overflow. This increases the possibility that some American and Canadian producers can start paying customers to empty their storage capacitiesStaunovo added.
Investors are particularly concerned about storage reaching capacity in Cushing, Oklahoma, the main center of operations of EE. USA
OPEC itself lowered its global demand forecast last week, which now stands at 92.82 million barrels per day, 6.91 million less than your previous estimate. The International Energy Agency (IEA) said that the coronavirus will end this year with almost a decade of growth in demand. "Even assuming that travel restrictions are eased in the second half of the year, we expect global oil demand in 2020 drop 9.3 million barrels a day from 2019, erasing almost a decade of growth, "the agency explained.
RESCUE THE SHALE INDUSTRY
The collapse of US crude oil prices has sparked speculation that America can bail out the shale industry faced with the crash of demand and the lack of storage capacity. Reserves continue to rise, and so is the fear that some producers of oil shale in the United States may fail.
As Michael Hewson, director of analysis at CMC Marktes in London, explains, the US wants to avoid the bankruptcy of some of the smaller producers, what would suppose big losses for several American banks.
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