Forex Marketz Daily Forex News – Fully Markets Update
Crude oil futures contracts extended Monday’s decline of 25 percent into the Asian trade session on Tuesday. So far today, the U.S. West Texas Intermediate (WTI) oil futures contract is down over 15 percent as traders are reacting to an increase of oil in storage.
Demand for the black gold has evaporated as the Covid-19 pandemic is curtailing global travel and vast sections of the global economy remains closed.
The West Texas Intermediate (WTI) crude oil futures contract is down 15.3 percent, at last glance, to trade at $10.82 per barrel. The international benchmark, the Brent crude oil futures contract is down 3.8 percent to trade at $19.23 per barrel.
On Monday, the WTI contract shed 24.56 percent and the Brent oil contract was down 6.76 percent. These benchmark contracts closed at $12.76 per barrel and $19.99 per barrel, respectively.
Crude Oil Traders React to the United States Oil Fund
Global demand for oil, as mentioned above, has fallen off a cliff. This is causing a surge in inventory levels as key global hubs are running out of room to store oil.
Traders are also digesting news that the popular go to source for retail traders, United States Oil Fund, which trades under the ticker ‘USO’ is selling off all of their contracts for June delivery starting on Monday.
The USO fund will hold onto longer-term contracts.
Even with the Organization for Petroleum Exporting Countries (OPEC) and non-member allies led by Russia, cutting production by 9.7 million barrels per day, starting on Friday, oil traders fear that this will not be adequate.
U.S. based companies, like Exxon and Chevron, are also scaling back pumping as demand dwindles. However, U.S. shale production was at near record levels during the first quarter of 2020 and this filled up storage capacity. There is no more room left for storage and no demand to alleviate this problem.
