The demand for oil has fallen faster and farther than at any point in history. But production has been slower to ebb
, though idiosyncratic in some ways, exemplifies the disaster scenario. The contract’s last day of trading was April 21st. The price plunged on April 20th, as traders realised they owned crude to be delivered to Cushing, Oklahoma, in May, but that Cushing would probably have no available tanks to store it.and its allies promised to restrain output by 9.7m barrels a day in May and June, their biggest ever cut. The accord was too late, though, to deal with the implosion of demand in April.
The agreement may be insufficient to deal with continued declines in demand in May, too, not least because the actual cuts are less impressive than the headline suggests. Not all of the more than 20 parties to the deal may comply. Moreover, Saudi Arabia, Russia and others in the group agreed to cut output not from the levels of February, but from an even higher base. The collective cut, compared with February of this year, is therefore closer to 7.
contract. But so far companies’ declared cuts have been too tepid: they are often loth to stop production, as restarting a well can be costly. Bernstein therefore expects global supply to exceed demand in the second quarter by more than 13m barrels a day. In the meantime, storage across America is filling up rapidly, and could reach tank tops in June. On April 22nd the country’s Energy Information Administration reported that crude inventories had reached 519m barrels, close to the record of 535m set in 2017. Brent crude is seaborne and therefore less vulnerable to transport and storage problems than landlocked. But it too faces constraints.
Unprecedented circumstances are bringing unprecedented behaviour. Oil is usually stored in giant ships such as a Suezmax, or the aptly named Very Large Crude Carrier, or onshore near big ports or population centres, such as Rotterdam or New York. Ben Luckock of Trafigura, a big trader, says firms such as his are now considering rail cars, small barges or even parked trucks. The price of a contract for a major crude benchmark may not sink again to -$40.
Singapore Latest News, Singapore Headlines
Similar News:You can also read news stories similar to this one that we have collected from other news sources.
Battered U.S. oil ETF to diversify investment in later-dated oil contractsThe United States Oil Fund LP, the largest oil-focused exchange-traded product (ETP) in the country, is moving to spread out its investments in oil futures in response to extreme market turbulence, it said in a filing https://bit.ly/2XWrj3L%E2%80%8B%E2%80%8B%E2%80%8B%E2%80%8B%E2%80%8B%E2%80%8B%E2%80%8B on Wednesday.
Read more »
Asia stocks pull ahead on U.S. stimulus, oil reboundAsian stock markets rose on Thursday as the combination of a rebound in crude prices from historic lows and the promise of more U.S. government aid to cushion the coronavirus-ravaged economy helped calm nervous markets.
Read more »
European stocks head for flat to lower open as oil prices reboundEuropean stocks are set to open flat to lower Thursday as the coronavirus pandemic and oil prices remain in focus for investors.
Read more »
Global Stocks Steady as Oil Prices RecoverOil builds on Wednesday’s rebound, which was sparked by the prospect of fresh U.S.-Iran tension
Read more »
Marathon Petroleum warns of loss, up to $7.8 billion hit on oil routMarathon Petroleum Corp , the largest U.S. oil refiner, warned on Wednesday of a first-quarter loss on a roughly $7.8 billion write-down from a sharp fall in fuel demand.
Read more »