Monday, April 20, marked an unprecedented phenomenon: in America, the price zapadnotekhasskaya oil WTI has broken the zero mark and stayed in a deep red, a little before reaching minus $40 per barrel. This has generated a lot of amateurish arguments in Internet forums and blogs about the “free oil” – until the supposedly upcoming free filling of the gas tank on the column. Actually, of course, freebies are foreseen: oil is cheap, will remain cheap in the short term, but nothing of the oil no one will get. Keep the gas tank wider!
But I must admit that the fall in oil prices is not a episode but a trend. Tuesday on the trading floors continued price collapse. On the over-saturation of the market, which took place long before the start of the pandemic, superimposed the almost complete lack of demand for oil due to quarantine measures. Stopped a huge part of the global economy – in the context of a pandemic, almost no planes fly and cars do not drive do not work, many enterprises closed almost the entire service sector… it Turns out that the oil almost useless. This, of course, painting with a broad stroke, but in General this is the case.
speaking specifically about the departure of oil prices in the negative, that this phenomenon belonged to the futures contract on the supply of oil in may of this year. This futures expired on Tuesday, April 21. After futures investors have had to get oil on his hands from those the contract is obliged to deliver the oil. But investors chose to pay in order to obtain owed to them, otherwise they would have to physically pick up the oil in Texas and store it in the nearest store, which was impossible: the vault is filled to capacity.
the episode of care rates minus lasted for some moments – after all, trading on commodity exchanges is real-time, and quotes are constantly changing. In this case the futures become more expensive, the further pushed back the delivery dates on these contracts. But on Tuesday to see price movements in real time was scary. Texas oil WTI with delivery in June in the early afternoon cost $20 per barrel, but by 11.30 am new York time, fell to $14. European grade Brent at $25 fell below $20. Sharply lower futures prices even in July and August.
at First, the White house reacted to the collapse in peace – like, it’s just the stock tricks, soon. But on Tuesday, Donald trump began to announce the measures. He stated that it is considering a proposal to halt deliveries to the us of crude oil from Saudi Arabia, even one that is on the way. He also announced that uses the current oversupply of oil to fill the Strategic petroleum reserve, which is not filled 75 million BArelay volume. Trump wants or to obtain from Congress permission to purchase cheap oil for strategic reserve, or to allow private oil companies to use the strategic reserve to store their surplus.
A surplus lot. According to the leaders of the Dutch company Vopak is the world’s largest private owner of oil storage tanks on different continents, the eyeballs filled all containers, except those which are repair and maintenance. Other related companies the situation is the same.
Broadcaster CBS showed an interview with Patrick Peyton – mayor “through oil” of the city of Midland in Texas (a population of 140 thousand people). “Like someone turned off the switch, – said the mayor. – We will need two years to rebuild our economy. Our boom lasted five years, and then in one week it turned into a recession…”
According to the former head of oil company BP John brown, “the situation is very reminiscent of the mid 80-ies: too much offer, too little demand.” At that time the low price of oil stayed 17 years, said brown in an interview with the BBC.
God forbid that happen again. As we remember, then, cheap oil has become one of the most important reasons for the collapse of the Soviet Union.
new York.
