SMM4 21: due to market concerns about crude oil demand is not good, supply is becoming more and more surplus, insufficient inventory space and other factors, overnight WTI May crude oil futures contract to refresh the three views of the decline startled interpretation. Crude oil futures of all categories in the United States fell into a negative range, in which WTI May crude oil futures fell to-40 US dollars / barrel for the first time in the history of crude oil futures, closing at-37.63 US dollars per barrel. Some analysts believe that Brent crude oil June contract will be settled within 10 days, but also afraid that it will fall to a negative value.
Some investment banks say the collapse in oil prices is a "symptom" of an unprecedented oversupply in the oil market and that crude oil producers are more willing to pay people to "buy" crude oil than the cost of shutting down an oil well. This has led to a negative price of crude oil in the hinterland of the United States. In addition, the delivery date of May crude oil futures is approaching, and prices usually jump short when futures contracts move positions and exchange months.
Crude oil stocks are worrying:
It is understood that at present, some parts of the world's crude oil inventory has been filled, in addition to many tankers are used to store excess crude oil, which also led to although the absolute price of crude oil is low, but the freight of oil tankers has been maintained at a high level.
S & P global Platts energy analyst Chris Midgley said that Cushing is an inland city, crude oil storage capacity is likely to fill within three weeks, once filled, WTI crude oil futures contracts for physical delivery will be more difficult. WTI crude oil futures prices tumbled as traders were forced to level their long positions to avoid buying physical crude without storage capacity.
Us crude oil inventories recently rose by more than 10 million barrels a day for the third week in a row, and this week's data rose by nearly 20 million barrels a day. Storage capacity at Cushing (Cushing), Oklahoma alone, is now 69 per cent, up from 49 per cent four weeks ago, according to the department of energy. Although current crude oil stocks are not at an all-time high, the current growth rate is unprecedented and the situation has not improved. Market participants believe that US commercial crude oil stocks are likely to exceed their historical peak in the next few weeks. The remaining reserves of US crude oil storage capacity may be fully filled around mid-May.
Trump shouted to collect savings:
As a result of the collapse in oil prices, the US energy industry has written to the Federal Reserve asking for changes to the terms of the $600 billion loan facility so that US oil and gas companies can apply for funds to repay their ballooning debt.
Yesterday, US President Donald Trump said the collapse in oil prices was largely a financial squeeze and that the current situation would last "very short". He said Congress would be asked to approve the purchase of oil as a strategic reserve, or at least allow companies to use the remaining storage space to store oil. "this is a good time to buy oil." He also said oil producers need to do more to cut production.
Oil market comments:
Mizuho futures director Bob Yawger pointed out that WTI crude oil futures fell to negative, this is a historic day. This shows that there is no space to store crude oil, basically washed away with water, crude oil is worthless. The current situation is that the pipeline and inventory are full, but oddly enough, the EIA data do not show that the current stock of crude oil is at its maximum. The collapse was also due to the eagerness of traders in long May contracts to close their positions.
Bank of America Merrill Lynch, the U. S. oil market needs a few weeks to rebalance if demand does not pick up, WTI crude oil June futures contract prices are also expected to turn negative.
She Jianyue, assistant general manager of one Germany Futures and an expert on crude oil, said that judging from the current monthly structure, the market believes that the oil market turning point may be after June, the monthly price spread will significantly narrow at the beginning of the contract in July, and the market will be significantly repaired in the second half of the year. Of course, the volatility of futures prices includes expectations, there is a question of advance, whether it is possible to change from May, which depends on the development of the epidemic prevention and control situation. On the one hand, the US can be sure of peaking earlier; on the other hand, shale oil production can fall rapidly.
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