US oil contract closed down - US $37.65/barrel

category:Finance
 US oil contract closed down - US $37.65/barrel


Figure zero hedge

All communication platforms are full of sympathy and compassion for contract holders, you know, this is not milk. In case of delivery, there is no place to deposit, there is no place to deposit. Traders in the trading group said.

Nowadays, oil barrels are more valuable than crude oil!

Since the beginning of the year, after the outbreak of the new crown epidemic and the break-up of the OPEC + agreement, the sharp drop in oil demand and the surge in supply have dealt a heavy blow to oil prices. In Mondays trading session, the price of the may contract broke the low since 1946 and fell to a negative value, meaning sellers had to pay their counterparties to reduce their crude inventories. The unprecedented drop in oil prices suggests that the U.S. oil market is oversupplied as global industrial and economic activity stops. Faced with a third decline in global demand, the unprecedented production cuts OPEC and its allies reached a week ago were too little and too late, Bloomberg reported.

Given the price dynamics, production cuts are unlikely to happen soon, the Wall Street Journal quoted Giovanni staunovo, chief investment officer of UBS wealth management, as saying He added that additional oil produced by Middle Eastern countries during the oil price war between Saudi Arabia and Russia may not reach customers until May or June.

At the same time of the surge of crude oil supply, the global crude oil storage space is in urgent need. As of April 10, US crude oil inventories rose by 19.248 million barrels from the previous week, a record high, according to data released by the EIA. At the same time, the change value of Cushing crude oil inventory increased for six consecutive weeks, and now it has reached 69% of the total capacity, up from 49% last month. In addition, it is pointed out that the global crude oil demand will shrink by about 29 million barrels / day in 2020, and the annual oil demand will plummet to 9.3 million barrels / day. The global crude oil market is facing increasingly severe challenges.

Were going to see a huge backlog of crude oil that will be difficult to repair in the short term, and there will be a lot of distressing goods in the market, Bloomberg quoted Michael Lynch, President of strategic energy and economic research, as saying in a telephone interview. People are trying to get rid of oil, but there are no buyers in the market.

At the same time, some analysts pointed out that, as the crude oil contract in May will be delivered on Tuesday (02:30 a.m. Beijing time 22), in order to avoid being forced to close positions, some traders will choose to close their positions in May ahead of time and rebuild their positions in June. This kind of market behavior also caused a lot of selling of contracts in May, and the prices fell sharply.

However, as of April 17, there were still more than 100000 open positions in May contracts, far higher than the five-year average of about 60000 open positions, according to zero hedging, a well-known financial website blog on Monday. Although the may contract will be closed on Tuesday, normally only 2000 contracts will be delivered. But this time the market is facing nearly 100000 contracts, about 100 million barrels of oil. With all commercial reserves about to run out next month, the destination of about 100 million barrels of oil is unknown.

Figure zero hedge

In addition, even if the may contract finds enough space for storage, the open position in June was 538000, equivalent to more than 500 million barrels of crude oil. That still means thousands of barrels of oil will be delivered next month. Where the oil will go and the price changes of WTI in June are still difficult to answer.

Brent crude oil June futures contract (quoted $25.54 / barrel on Monday) will be due for delivery within 10 days. Some media commented that the oil distribution June contract will be the next victim of the epidemic and oil price war, and may fall to a negative value.

Michael tran, managing director of global energy strategy at RBCC capital markets, was quoted by Bloomberg as saying: there is nothing to stop the spot market from further declining in the short term. As storage levels in the U.S. reach their limits, market pressure will deepen until we reach the bottom or the epidemic is completely eliminated, whichever comes first, but now it looks like the former. (Editor: Zhen Zhen)

Extend reading negative! Us may WTI crude oil futures closed at US $37.63 per barrel