Selasa, 28 April 2020

Oil plunges again after sudden index shift prompts firesale - BNNBloomberg.ca

Crude whipsawed near US$11 a barrel after a major index tracked by billions of dollars in funds bailed out of near-term contracts for fear prices may turn negative again.

June futures fell as much as 21 per cent in New York before paring some of the decline to trade 8.8 per cent lower. S&P Dow Jones said it will roll all of its West Texas Intermediate contracts for June into July on Tuesday, due to the risk that the nearer contract will go negative.

Crude for July rose as much as 9 per cent to US$19.66.

The United States Oil Fund LP is also selling all of its WTI June contracts, while several other ETFs have said they will exit near-term contracts and buy later ones.

Oil has dropped about 80 per cent this year as the coronavirus outbreak vaporized demand for everything from gasoline to crude.

The world’s biggest producers have pledged to slash daily output starting next month to balance the market, but the collapse in consumption has led to a swelling glut that’s testing storage limits worldwide. U.S. producers have started delivering crude to the nation’s emergency stockpile as commercial space runs out.

“The ETF rolls have added volatility,” said Paul Horsnell, head of commodities strategy at Standard Chartered. “This is the most extreme stress it has been put under,” he said, referring to WTI prices.

Prices:

  • WTI for June dropped US$1.08 to US$11.70 a barrel as of 11:40 a.m. London time. It earlier fell to as low as US$10.07.
  • Brent for the same month gained 51 cents to US$20.50.
  • Dated Brent, a reference for nearly two-thirds of the world’s physical crude, dropped to US$13.62 on Monday, from US$16.01 on Friday, according to traders monitoring prices from S&P Global Platts.

--With assistance from James Thornhill.

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2020-04-28 11:18:20Z
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