WTI Leads Losses on Storage Fears
Oil prices fell on Monday on signs that worldwide oil storage is filling rapidly, raising concerns that production cuts will not be fast enough to fully offset the collapse in demand from the coronavirus pandemic.
US oil futures led losses on fears that storage at Cushing, Oklahoma, could reach full capacity soon. US crude inventories rose to 518.6 million barrels in the week to April 17, near an all-time record of 535 million barrels set in 2017, CNBC reported.
US West Texas Intermediate June futures fell $1.49, or 8.8%, to $15.45 a barrel, while Brent crude was down 44 cents, or 2.1%, at $21.00 a barrel.
Oil futures marked their third straight week of losses last week — and have fallen for eight of the past nine — with Brent ending down 24% and WTI off around 7%.
Retail investors were caught off guard last week when the May WTI contract plunged into negative territory for the first time ever two days before expiry as financial traders scrambled to avoid having to take delivery of oil.
The June WTI contract’s price fall may have been triggered by investors moving to later months to avoid a similar fate, said Tony Nunan, a senior risk manager at Mitsubishi Corp in Tokyo.
“Anybody who has had length who doesn’t have storage contracts has either closed their positions in June or rolled far forward ... because it’s suicide to carry a position into the close after seeing what happened last month,” he said.
source: Financial Tribune
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