Global oil markets remained under intense pressure on Tuesday, with Brent crude dropping below $20 per barrel for the first time in 18 years while other major benchmarks across the world tumbled.
Brent, the international crude marker, slipped to $18.10, indicating that markets see no immediate let-up to the collapse in oil demand that sent some US oil benchmarks plunging under $0 for the first time on Monday, leaving producers paying for buyers to take their oil away while available storage is scarce.
Coronavirus has sent the oil sector into a state of crisis, with lockdowns implemented by authorities to smother the outbreak slashing demand for crude by as much as a third.
Contracts for the US benchmark West Texas Intermediate for delivery next month tumbled as low as minus $40 a barrel on Monday. Analysts at Citi warned that “if global storage worsens more quickly, Brent could chase WTI down to the bottom”.
The collapse in the May WTI contract was partly a technical product of the fact that it expires on Tuesday, meaning trading volumes were low and making the contract for June delivery more noteworthy, analysts said. That contract held above $20 a barrel on Monday but slid as much as 42 per cent on Tuesday to trade at lows of $11.79, suggesting the blowout in the May contract was more than a blip and that the entire global oil market faced challenges.
Goldman Sachs analysts said the June contact was likely to face downward pressure in the coming weeks, pointing to the “still unresolved market surplus”.
“As storage becomes saturated, price volatility will remain exceptionally high in coming weeks,” they said. “But with ultimately a finite amount of storage left to fill, production will soon need to fall sizeably to bring the market into balance, finally setting the stage for higher prices once demand gradually recovers.”
Warren Patterson, head of commodities strategy at ING, said it was likely that “storage this time next month will be even more of an issue, given the surplus environment”.
“And so in the absence of a meaningful demand recovery, negative prices could return for June,” he added.
European equities traded lower, partly dragged down by weaker energy stocks. The continent-wide Stoxx 600 was down 1.9 per cent, with its oil and gas sub-index dropping 3.3 per cent. In London the FTSE shed 1.7 per cent, while Frankfurt’s Dax slid 2.3 per cent.
Equities were also broadly lower in Asia, with futures tipping US stocks to fall 1 per cent when trading in New York begins later.
On Wall Street overnight, the S&P 500 closed down 1.8 per cent, partly because of weakness in energy shares, but also due to increased pessimism over the time it will take for countries to emerge from lockdowns.
In fixed income, the yield on the 10-year US Treasury fell 0.03 percentage points to 0.585 per cent as investors retreated to the safety of the debt.
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Goons.....say something......she was not wearing a burka
showoff...who cares..!!
Show off....who cares..!!
BJP MLAs are playing in crores. where does this money come from. Income tax officers should raid this type of MLAs for right source of income. this is definitely from unlawful activities and illegal. MLAs are playing with crores whereas poor people are carrying dead bodies of their beloved on their shoulders and baby is dying on ones shoulder because Govt hospital did not provide him stretcher. What a shame. Its shameful to our public who select these types of goonda people to be Ministers only to get enriched.
What is her age?
Yes BJP MLA's are all coming in media for wrong reasons.. They themselves living in LUxury and never care for the poor of the country.
The road condition is not good enough for these imported cars....very expensive car.....fixing dent of car will require another one crore....rickshaw guy should be compensated with at least one crore....
everybody once will hit their new vehicle somewhere. why only targeting politicians all the way, if something did by congress, bjp will highlight. if bjp congress will blame. now a days media also doing the same thing, seriously alteast media should stop their saffron views. work for the development of the society provide true news to our people.
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