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.
Comments
Its all like a Drama.... nee Atta haage maadu.. naaa hodeda haage maduttene...
If you have real concern about Mangalore Minority, Please please please arrest him.. your own government your own administration.
Hello Kodichal bhai, why sou moto case ? Let the people know that You or your Congressmen doesn't have guts to register a case against him. Wear Bangles and sit at home, your prepoll planned press conference will not give any mileage. We all know you guys want bhatta or any other card to use it for your election purpose. Know one is dependent on Karnataka congress government. Also tell ministers in DK to wear saree and sit at home. Don't worry about Bhatta, we know how to deal with him and out to prevent communal harmony.
Haji Ibrahim Bhai.
Two years back same bhatta barked at Gurupura against Muslims, the same congress party is ruling karnataka... Until now no any action taken against him.
Youth congRSS president Mithun Rai shouted at Gurupura, in future if bhatta going to speak anywhere he will take hindu youngsters of congRSS to stop his speech. Where is now this mithun?
You congRSS people can fool all the muslims one time, not all the time.
We now understand what is congRSS, and what is BJP.
Stop drama.... arrest bhatta now and put him behind jail for long time. then only we can understand original congress is ruling karnataka.
dont give any press conference.
No use of making bow, bow ...... in the public....Bhatta is ready with Anticipatory bill.... Still you trust xxxxxx cong ....
Shame on you kodichal.
Your own party ruling the karnataka.
Don't do drama in front of the people. There is no need to announce openly to arrest Batta. Order police to arrest him and put into cell.
What a drama?? you congress people are best for drama only, you people are in power and you people begging with police, shame on you congress.. Congress cheating people only with statement. Muslims also blindly supporting these people. what a tragedy.
These useless leaders are joking their selves! When the people gave them power why to fear RSS??? Or Is RSS controlling Congress Leaders??? Next time please don't come to ask for vote by showing RSS fear!!! People of Dk understood the Reality.
Your own Siddramulla Khan is ruling Karnataka. prior to last election he had promised to take action against Bhat. now his partymen want advice from Bhat's pariwar.
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