Brent barrel fell below $ 20

The turmoil in the oil market, sunk by the lack of demand due to the pandemic, persisted this Tuesday after in the United States, the holders of sales contracts to May had to pay to get rid of the oil.

The value of crude in the USA it recovered from yesterday’s negative, but nevertheless it was at a paltry price of $ 10, which does not bode well for the market. Affected by the same global outlook, on the other side of the Atlantic, Brent crude sank to $ 19.33, its lowest value in 29 years.

The variety of Brent is the one that is generally used as the basis for the international market and the one most looked at by the oil companies that work in Argentina.. It is, in other words, the reference used in the country.

One analyst synthesized the debacle: Crude “is worth less than a pizza.”

So this Tuesday, after a historic collapse on Monday, the barrel of oil for delivery in May quoted in New York returned to positive territory, but the price of a barrel with delivery in June had a historical drop of 43%.

The price of a barrel for WTI, whose contract expired on Tuesday, fell for the first time in history to negative territory on Monday, to -37.63 dollars, which means that the owners of the purchase contracts paid to find buyers for the physical oil. On Tuesday, after several swings, that contract ended at $ 10.01.

However, this rebound does not augur a change in trend for the coming weeks.

The barrel for June delivery, which will be the reference from Wednesday, fell 43% to $ 11.57, something never seen since the creation of these future contracts in 1983. During the day, it fell to $ 6.50 per unit.

In London, meanwhile, the North Sea Brent barrel for June delivery sank 24.4% to $ 19.33, its worst drop since the start of the Gulf War in 1991.

Quotes, by the floor

“I never thought it would be possible for US crude to be worth less than a pizza or even a slice of pizza!” Said Jameel Ahmad, head of currency strategy and market research at FXTM.

“It was unthinkable but it became a reality for traders that the price of US crude was negative for the first time in history,” exclaims Ahmad incredulously.

“WTI and Brent have recorded significant losses today“David Madden, an analyst at CMC Markets, noted,” with a very particular focus on Brent, “which was a little on the fringes of WTI’s historic collapse on Monday.

An endless collapse

The oil market has been collapsing for several weeks.

Negative prices mean that operators have to pay to find buyers who physically take possession of the oil, a difficult job in these times when there is practically no storage capacity due to the collapse in demand and production that continues to exceed the needs of the market.

In the United States, storage is a pressing problem, since WTI is delivered in a single place in the interior of the country, unlike in Europe where there are more storage points and its proximity to the sea allows it to be stored in oil tankers..

National Gas Intelligence reports a fill rate of 80%, according to analyst Ipek Ozkardeskaya at Swissquote Bank.

This is enough to “shock oil producers and encourage them to take more meaningful steps to support prices,” says Fiona Cincotta of Gain Capital.

Several producing countries met by teleconference this Tuesday to analyze the “dramatic market situation”, the Organization of Petroleum Exporting Countries (OPEC) acknowledged on Tuesday.

Russia, OPEC’s main external ally, did not participate in the virtual meeting, a spokeswoman for Russian Energy Minister Alexander Novak told AFP. The share of Saudi Arabia, the world’s largest exporter, was also not confirmed.

The cartel and its main allies like Russia pledged last week to cut its production of black gold in record proportions, but the cuts remain insufficient relative to falling demand.

Saudi Arabia, the cartel’s leader, said on Tuesday that it is “keeping a close watch” on oil markets, and “is ready” to take “any further measures” after the price collapse., according to the official press agency SPA.

US President Donald Trump announced that he will ask his cabinet to launch an emergency aid plan for the oil and gas industry, badly hit by the precipitous drop in prices.

“We will never drop our large US oil and gas sector,” he promised.

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