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Oil falls on concern over storage and earnings

CommoditiesApr 20, 2020 07:15AM ET
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© Reuters. An oil pump jack pumps oil in a field near Calgary

By Bozorgmehr Sharafedin

LONDON (Reuters) - Oil prices fell on Monday, with a U.S. crude futures contract hitting its lowest level since 1999, depressed by concern that U.S. crude storage will soon be full while companies prepare to report the worst quarterly earnings since the financial crisis.

Brent (LCOc1) was down $1.12, or 4%, at $26.96 a barrel by 1008 GMT.

The front-month May WTI contract (CLc1) fell $4.79, or 26.2%, to its lowest since March 1999 at $13.48, though the sell-off was exaggerated by the contract's imminent expiry.

"The May contract is set to expire tomorrow and the bulk of the open interest and volume is already in the June contract," said ING's head of commodities strategy, Warren Patterson.

The June contract , which is more actively traded, fell $2.18, or 8.7%, to $22.85 a barrel.

The volume of oil held in U.S. storage, especially at the Cushing delivery point for the U.S. West Texas Intermediate (WTI) contract in Oklahoma, is rising as refiners throttle back activity in the face of weak demand. [EIA/S]

"As production continues relatively unscathed, storage is filling up by the day. The world is using less and less oil and producers now feel how this translates in prices," said Rystad's head of oil markets, Bjornar Tonhaugen.

Oil in floating tanker storage is also estimated at a record 160 million barrels.

The mood in other markets was also cautious as the first-quarter earnings season gets underway. Analysts expect STOXX 600 companies to post a 22% plunge in earnings, which would represent the steepest decline since the 2008 global financial meltdown, IBES data from Refinitiv showed.

The German economy is in severe recession and recovery is unlikely to be quick, given that many coronavirus-related restrictions could stay in place for an extended period, the Bundesbank said on Monday.

Japanese exports declined the most in nearly four years in March as U.S.-bound shipments, including cars, fell at their fastest rate since 2011.

Bearish sentiment was reinforced by lowered oil consumption forecasts from the Organization of the Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA).

The oil industry has been reducing output swiftly to counter an estimated 30% decline in fuel demand worldwide.

Production cuts from OPEC and allies including Russia will take effect from May. The OPEC+ group has agreed to reduce output by 9.7 million bpd.

Officials in Saudi Arabia have forecast global supply cuts from oil producers could total nearly 20 million bpd, but that includes voluntary cuts from the likes of the United States and Canada, which are unable to turn production on or off in the way that most OPEC nations can.

Oil falls on concern over storage and earnings
 

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Comments (35)
maga king
maga king Apr 20, 2020 10:06AM ET
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cheap oil is good for consumers!
Tutor Joseph
Tutor Joseph Apr 20, 2020 9:16AM ET
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This will never happen. Read :https://oilprice.com/Energy/Energy-General/Would-Trump-Actually-Pay-Oil-Producers-Not-To-Pump.html
Sean Ong
Sean Ong Apr 20, 2020 8:03AM ET
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Oil price is well below $10 is the best for consumers. the longer cheaper the better.
Jihye ha
Jihye ha Apr 20, 2020 6:55AM ET
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the price is intentional by importing saudi oil too much since feb. now JP morgan is preparing to operate shale company itself by founding a corporate. everyone should know what IBs and gigantic oil refiners are doing.
Jihye ha
Jihye ha Apr 20, 2020 6:50AM ET
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this price is very intentional by importing too much saudi oil since feb. JP morgan is preparing to operate shale company by itself.
perplexed76 .
perplexed76 . Apr 20, 2020 2:33AM ET
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15$ too expensive for a small barrel particularly as iron part is not included.
ilikeshorter spi
ilikeshorter spi Apr 20, 2020 1:47AM ET
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Thank you GS for pushing the price down. We get to enjoy the cheap fuel now. However,it wont be too long before they push it back to $40 again,citing some unbelievable excuses .
Peter Dikeakos
Peter Dikeakos Apr 20, 2020 1:10AM ET
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How many Oil producers are cheating in their quotas? 50/%?
Gamer Turtle
GamerTurtle Apr 20, 2020 12:16AM ET
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too many longs in oil, so it falls. too many shorts in equity so it rises continuously. oil says economy will continue experience hardship with demand, equity says V recovery - probably before lockdowns are removed, I say neither statement has anything to do with the economy, just group of people with a lot of leverage power controlling the market.
Get Sirius
Get Sirius Apr 20, 2020 12:16AM ET
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Good point
Akshay Maheshwari
Akshay Maheshwari Apr 20, 2020 12:16AM ET
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Agree
steven hitt
steven hitt Apr 20, 2020 12:14AM ET
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dont worry, the fed is busy devaluing the USD to pump stonks
franklin neversoy
franklin neversoy Apr 20, 2020 12:01AM ET
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Futures under pressure from oil plunging
Charles Kao
ckao Apr 19, 2020 11:50PM ET
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I gave up all analysis tools for now.  No bet may be the best bet.
Robert smith
Robert smith Apr 19, 2020 11:50PM ET
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-particularly if you have been buying and trading these super expensive options, the rich boys who own this market can afford to buy and hold this market on nothing but the money they can make selling the puts, they can sell the calls too and that's just what I expect them to do. do you realize that you can sell a tsla June 350 put for nearly $1000. any idea what it would take to turn that super bull bearish and get it UNDER $350 by June? its just free money. this is true of most great stocks, but I don't expect to see them going UP either. ESPECIALLY enough to make money on calls with 100pt premiums! no, imho the game is in shorting WAY out of the money puts and calls for the next month or two,
Midway Eholdings
Midway Eholdings Apr 19, 2020 11:21PM ET
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Not a fossil fuel after all? Hmmm
Me comment
Me comment Apr 19, 2020 10:56PM ET
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Cashed out big-time when May slid through $15 and I nail more when June passes through $23 anywhere in the world.
Kilo Byte
Kilo Byte Apr 19, 2020 10:48PM ET
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How low can it go?  Cheap oil for all!
Idar Polden
Idar Polden Apr 19, 2020 10:48PM ET
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WTI less than $10 while Brent has already reached the bottom and is headed for above $40
my name
my name Apr 19, 2020 10:32PM ET
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well, that article aged quickly! MAY ALREADY HIT $14.47!!!!
Matt Georgopulos
opulo01 Apr 19, 2020 10:09PM ET
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Try following the oil spot price for context regarding the rollover to the June futures contract price.WTI/USDToday's open lower makes a lot more sense when you look at that instead.
Anthony Ramunno
Anthony Ramunno Apr 19, 2020 10:09PM ET
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You are correct. Most dont know that.
Patron Silver
Patron Silver Apr 19, 2020 9:28PM ET
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we are in a recession. dont get it twisted
Terry Barker
Terry Barker Apr 19, 2020 8:39PM ET
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The futures price on oil changed contracts
Terry Barker
Terry Barker Apr 19, 2020 8:37PM ET
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You may think oil this cheap is good but only if you have to spend less on gas to get to the unemployment office
MuraliKrishna Brahmandam
MuraliKrishna Brahmandam Apr 19, 2020 8:28PM ET
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this is a war between human race and Chinese. hope humans will win against Chinese. crudayil will shoot up ... just throw one bomb oil will go up 10 doraa
yue dai
yue dai Apr 19, 2020 8:28PM ET
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you are fighting with yourself. Did you see any Chinese around?
Anwar Sumarto
Anwar Sumarto Apr 19, 2020 8:28PM ET
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brahmana will *******all racist people
Fabian Alonso
Fabian Alonso Apr 19, 2020 8:28PM ET
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They are as always, behind scenes. As they use to work.
jc li
jc li Apr 19, 2020 8:28PM ET
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Chinese is consumer of oil, yes you need force them to buy more for price to go back up.
Kwong To
Kwong To Apr 19, 2020 8:28PM ET
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You evil Indian.. NCOV is going to catch up with you.
maga king
maga king Apr 19, 2020 8:22PM ET
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cheap oil is good for consumers!
Kilo Byte
Kilo Byte Apr 19, 2020 8:22PM ET
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So glad Drumpf's "greatest oil deal in history" failed miserably.
Kwong To
Kwong To Apr 19, 2020 8:22PM ET
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Greatest failed oil deal in history.
Tutor Joseph
Tutor Joseph Apr 19, 2020 8:00PM ET
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Oil will hit US10 . Dow will hit 20000. Thanks to Trump
Alfred Craig
Alfred Craig Apr 19, 2020 8:00PM ET
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I agree on oil but DOW may go much much lower.
jc li
jc li Apr 19, 2020 8:00PM ET
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Trump can call his buddies and broker another production cut deal.
John Kinsey
John Kinsey Apr 19, 2020 8:00PM ET
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the dow has been below 20 already, where have you been?
acheciyo gonzalez
acheciyo gonzalez Apr 19, 2020 7:49PM ET
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I added two lots of WTI to my portfolio so lets ser what happen!
Emmanuel Rockson
Emmanuel Rockson Apr 19, 2020 7:49PM ET
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on a sell?
Kilo Byte
Kilo Byte Apr 19, 2020 7:30PM ET
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Yeah baby! Cheap oil for all!
 
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