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
Is Modi Govt taking care of indians or UK. Is he PM for UK or India. He has already sold India in the hands of foreign investers and now selling indian assets also which was inherited from old kings. May be Modi will sell Taj Mahal, Qutub Minar, Vidhana soudha, Srirangapatna Mandir, Kollur Mandir to foreigners and make money for bjp and its supporters. shame on you bjp Govt. It will be better to kick out this Govt very soon otherwise we Indians will be completely sold out to foreigners. Beware of this looter's Govt.
Cheddi fans are BLINDLY supporting him. Start opening your EYES ... Looters have no issue and those helper who in the first place helped the british to loot the KOHInoor has no issue... Its not new.
Modi Govt. is a very big fake and rubbish Govt. any promise they fulfilled till now..?, hope their term will complete very soon after that only Acche Din will come..
After all RSS is the agent of British raj. How can they go against their
will ? THE REAL NAME OF RSS IS ROYAL SECRET SERVICE, which was giving then British rulers information about indian freedom fighters.
They are their sole agent then and even now.!
BLACK MONEY BHI NAHI KHOHINOOR BHI NAHI
Waah thief waah!!!
Next he will tell British never invaded India.
We invited them to learn to wear bikini.
RSS is the enemy of India.
It did not surprise me... We know cheddis partner during freedom struggle...
I think Kohinoor diamond belongs to Mugals (Shahajan). how Ranjith Sing is gifting British
Yes, its nice to see it with queen rather than kept here in India...someone will take it if it is kept here....can't trust....
Same like \National Herald is gifted to Sonia Gandhi and not looted by her\" as claimed by Congress party."
If a slave gives a \gift\" to his master, there is always room for reinterpreting the idea behind the \"gift\". But if the new masters are not different from the old, how can this happen? This is the tragedy of India - and this is why we ought to see that the Cong, BJP, CPI etc are actually a continuation of the British colonial legacy. You can defeat them in some cricket matches, but when it comes to substantive issues, you concede the match even before it begins. This is the colonialism of the mind."
Look like air leaking from 56inch chest.
Soon it will be 26 inch.
This decision of govt also justify
British rule over India.
Shame on BJP.
bjp and rss revere godse, the criminal who brutally killed Gandhiji. bjp/rss are agents of british
We want Kohinoor back, who is government to tell them to keep it and they then call themselves as nationaliats. These are real anti-nationals and agents of British.
@Tolerant Indian: Disappointing. The Brits don't deserve our Kohinoor. But if was a gift, then we shouldn't be expecting it back. Blame our Maharaja of Punjab. Height of MASKA GIRI.
Tolerant Indian: spineless modi. Kohinoor belongs to India. it is India's shaan. lalit modi now vijay mallaya took our money to UK. farmers and poor are committing suicide and government gifting riches to other countries.
@Tolerant Indian: Indians have the generosity to make the world rich, by gifting and stashing money in foreign countries!
We have had gifted everything to British during British rule! And now our Rich Indians started gifting by moving out of the country to get settled in UK? There is no surprise, everything is fine in Love to English!
Bring Kohinoor Back Kohinoor was our heritage, it should be brought back.
Kohinoor wasn't a gift. But a war prize that was pushed down our throats by sly East India Co. Better revise stand.
Everyone knows that RSS is always acted as British agent.
Kohinoor was not stolen from India. It was merely abducted. Shine On You Crazy Diamond.
Someone just told me 'we have enough gems in the govt, who needs Kohinoor.'
Okay Britain, let's do a deal. You give us back on thing we gave you - Kohinoor. We'll give you back one thing you gave us - Section 377.
modi govt run by buffoons: Kohinoor gifted by Ranjit Singh to brits? he died in 1839, brits snatched diamond in 1849!
After all, the difference between \gifted\" and \"lifted\" is just one letter."
Add new comment