April 21, 2020

Oil contracts turn negative amid collapsing demand and storage shortages

Oil contracts turn negative amid collapsing demand and storage shortages

Market Commentary
21/04/2020

Yesterday the short-term forward price for WTI oil turned negative for the first time in history. This was mainly due to the way contracts are settled, but highlights the impact of the collapse in demand on inventories.
The US-brokered deal to cut global production by 10% is proving inadequate as global demand is dropping by 30%
Weak demand following uncertain growth prospects and inventories will keep a big pressure on prices and we do not see any scope for increases before Q3.
The outlook of lower for longer prices is starting affecting oil producing countries and step up the stress on the overleveraged US shale sector.

OIL CONTRACTS TURN NEGATIVE AMID COLLAPSING DEMAND AND STORAGE SHORTAGES

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