Forex Marketz Daily Forex News – Fully Markets Update
Crude oil futures contracts plummeted on Monday. The front end U.S. West Texas Intermediate (WTI) spot oil contract cratered. This contract was down over 100% to trade in the negative for the first time in history as demand for the black gold has evaporated.
The WTI spot crude oil contract, for May delivery, plummeted over 100 percent to close in the negative at minus $37.63 per barrel. Producers were paying traders to take oil from them.
The international benchmark, the Brent crude oil futures contract had already rolled into the June contract and lost 8.9 percent to $25.57 per barrel.
Negative price has never been seen before for any spot oil contract. The spot futures contracts trade month to month and the June WTI contract expires 19 June was last down 18 percent to trade at $20.43 per barrel.
The WTI contract is a heavily traded contract and a good barometer of the overall oil market. The July contract is down 11 percent to fetch $26.18 per barrel.
Crude Oil Traders watch Price Action and Demand
Oil traders still do not think that yesterday’s collapse truly reflects the situation in the battered oil markets.
The price of the closest spot contract, which has now expired, was already detached from the June and July contracts. Both of these contracts are still above $20 per barrel.
The Covid-19 pandemic has dealt the global economy a huge blow. This has evaporated the demand for oil as travel is restricted and factories are closed.
Even with the Organization of Petroleum Exporting Countries (OPEC) and non-member allies led by Russia recuing production by 9.7 million barrels per day, global supply continues to swell.
Traders feel that this production cut deal is not big enough to help the supply glut and virtually no demand for the black gold.
The U.S. International Energy Agency (IEA), has said in its monthly report, that demand in April, should fall by 29 million barrels per day. This has not been seen since 1995.
