In the night from 20 to 21 April, the oil has experienced a record in the history of the decline — the price of a barrel of the us variety WTI fell to negative values. In other words, producers had to sell raw materials at a loss just to get rid of became patch fuel volumes.
representatives of the Russian authorities in the person of Deputy head of the security Council, Dmitry Medvedev immediately suspected cartel aimed against our country. However, experts do not hasten to support the political version of the incident.
Most analysts believe that the international financial speculators acting in their own selfish interests, “using” to attack the oil overall situation with the pandemic. However, regarding the predictions, the experts are divided: the optimists, suggesting progress in the fight against coronavirus, believe that the price of a barrel by the end of the year can be around $50. Pessimists believe that the demand for raw materials will rise very slowly and the cost of the “barrels” and will not exceed $25.
a Similar collapse in the international oil market was observed nearly a century ago. Only in the 1930-ies the price of “black gold” fell below $1 per barrel.
In 2020, the situation repeated itself — not even helped the new deal OPEC+ on the limitation of production of raw materials, in which participated the United States, and also representatives of the extractive powers of Latin America.
Pandemic coronavirus and the subsequent decline in demand for hydrocarbons has led to a global overflow storage. A raw material ceases to be worth something, if it couldn’t be taken out and nowhere to store.
oil prices late in the evening of 20 April fell by more than 300%. Stock price went into negative territory: for futures deliveries in early summer, even had to pay extra.
Panic on the trading floors reached boiling point. The price of Russian Urals fell below $10: this was not even in the crisis year 1998. In the situation on the international energy market, Deputy head of the security Council, Dmitry Medvedev suspected cartel. In his opinion, it is quite possible, it was directed against Russia and agreed to between the United States and Saudi Arabia.
With this point of view does not agree partner of consulting company RusEnergy, economist Mikhail Krutikhin. “Currently, the global oil market is a war of all against all. Conspiracy solely against Russia by Saudi Arabia and the United States say no. Each of the producing countries pulls the blanket over himself, and no one plays it against Moscow. Most oil producing countries sell hydrocarbons at the lowest prices, just to keep at least a modest profit,” — says the expert.
Industry analysts don’t believe in conspiracy theories of evolutioncircumstances. As explained by the head of IAC “Alpari” Alexander Razuvaev, futures on the commodity oil has a shelf life, which guarantees the supply of “black gold” in certain dates. In reality it is not tied to the real producers and buyers of raw materials.
“It’s white-collar workers who sit in a comfortable chair and not even have the knowledge about the chemical derivative raw materials, which earned a record state. Futures — only paper, the contract between the buyer and seller. The contract stipulates price, volume and grade of oil, as well as delivery time”, — the expert explains.
meanwhile, the document sets out the terms of a possible change of the holder. The hydrocarbons supplier is not obliged to know that the change of the buyer occurs without the prior agreement with him — the counterparty has the right to sell the contract in every moment with any reliable buyer. In other words, the futures contract is profitable speculative tool, which is able to capitalize on the people absolutely far from the direct production of hydrocarbons.
“for Example, you need a certain amount of oil, but the supply does not at the moment, and six months. However, on the cost of the raw materials you want to negotiate now. Theoretically you can just buy a contract at today’s price and wait for delivery, regardless of how much oil will cost in six months,” — says Razuvaev.
Commodity futures contracts are divided into two types — design and delivery. The estimated traded solely on price at the time of refund. These are the most common terms. Futures Brent or WTI realized in the form of a standard contract for difference, therefore, between the parties is only cash settlement for the virtual equivalent, without delivery of real goods. The settlement amount is the difference between the fixed price specified in the contract, and the fair value of the asset at the time of closing of the transaction.
Deliverable contracts are only available to oil companies that process or transport oil. According to statistics, today only about 3% of the contracts ends with the real delivery of the goods to the buyer.
“Now the majority of transactions for oil on the exchanges is carried out in the form of cash-settled futures contracts. That is, trading is not the oil itself, and its market value. Below zero the price of oil dropped it was the speculators. In the markets for the first time. We can say, financiers washed producers,” grins the senior analyst “BKS the Prime Minister” Sergey Suverov.
Negative quote means that the seller of the futures contract pays the buyer: in the end, the ultimate holder of the instrument receives the money and may still get the oil out. Physical delivery of WTI crude oil, if it comes the case, to be held at the terminal Cushing (Oklahoma), a key us oil hub, from 1 to 31 may. The oil reserves there in the last week increased by 12%, to 55 million barrels, the data in the energy information Administration of the United States.
by the Way, trading statistics shows that at zero price of the may futures of WTI has been more than 2 thousand transactions. At a price of minus $38 was recorded a few dozen transactions. In other words, even with an unprecedented negative prices were committed many transactions.
What will happen to the price of a barrel next? Nothing good, said Mikhail Krutikhin. “Prospects eyes are not encouraging. Oil prices are determined by demand for raw materials, which is currently the minimum, and until that moment, until the world will cope with the epidemic of the coronavirus, rotation in the positive direction should not wait” — says the analyst. But there are other opinions.
“I Want to remain optimistic. Success in the fight against the coronavirus will not only Russia but the whole world economic breakthrough. Oil prices will rise to $50 per barrel. The continued problems on this front will continue to sink our country and the entire global financial system, in the swamp of the crisis, and oil prices will exceed $25 “a barrel”, says Suverov.
