The oil market witnessed an “epic collapse” on Monday. U.S. WTI crude fell into negative territory for the first time in its history in May, closing down more than 300 percent at $37.63 a barrel. This is a phenomenon not seen since Nymex began trading light crude in 1983. International spot gold again challenged the $1,700 mark on Monday after a sharp drop in oil prices sparked a renewed risk aversion among investors, giving gold some buying support. In terms of the global epidemic, the global total number of confirmed COVID 19 cases has exceeded 2.48 million, the total number of deaths has exceeded 170,000, and the total number of confirmed cases in the United States has exceeded 790,000. The latest WHO warning says “the worst is yet to come”.
The may contract for WTI crude oil plunged 306 per cent, ending in negative territory for the first time in its history
Oil prices plunged in New York on April 20, weighed down by a huge glut in the U.S. oil market, the imminent expiration of contracts and a decision by Texas on whether to cut production. U.S. WTI crude fell into negative territory for the first time in its history in May, closing down 306 percent at $37.63 a barrel.
U.S. WTI crude hit an all-time low of $40.32 a barrel in May trading. That is well below the lowest level since the end of the second world war, when monthly data began in 1946, according to the st. Louis fed.
The extreme move underscores the extent of the oversupply in the U.S. oil market. For the first time in history, U.S. crude oil prices have slipped into negative territory, meaning sellers of crude futures must pay a fee to buyers.
Meanwhile, the June WTI contract, which expired on May 19, was down about 15.7% at $21.10 a barrel. The July contract was down about 5% at $28 a barrel.
Brent crude, the international benchmark for the June contract, was down 8.8 percent at $25.60 a barrel. But it is not nearly as weak as U.S. crude, as there is more room for global storage.
Most market analysts believe the recent agreement between the organization of petroleum exporting countries and a group of non-opec producers to cut output will do little to ease a glut in April and that prices need to fall further to force more oil and gas companies to cut or halt production to restore balance to the market.
WTI crude may futures will expire on April 21, local time. NYMEX New York crude oil may futures contract to change positions, April 22, Beijing time at 2:30 am, the floor to complete the final trading, electronic final trading at 5:00 am.
Traders holding the WTI crude contract for may fear it will be difficult to find a place to store physical oil amid a growing supply glut. Also concerned about the lack of demand for physical oil, investors sold out before the may contract expired late Monday. When a futures contract expires, the trader must decide whether to accept physical delivery or to roll over his position into a far-month contract.
Some analysts pointed out that WTI crude oil futures need to be delivered in Cushing, and that Monday’s plunge in prices was due to traders holding the WTI may contract being unable to sell the contract and not having room to store the oil for delivery. This suggests that all the crude oil warehouses in Cushing have been booked, the storage market is in poor shape and stocks are close to full capacity, so the question remains whether the June WTI contract can avoid a slump. Further falls in the price of crude oil could cause more producers to shut down. If demand does not pick up by mid-may, the WTI crude contract for June could face the same fate.
Bob Yawger, head of mizuho futures, said it was a historic day for WTI crude to plunge into negative territory. That suggests there is no room to store crude and that traders who are long the may contract are rushing to unwind their positions. The current situation is that both pipelines and inventories are full, and EIA data do not show that the current inventory of crude oil is at its maximum energy storage.
Peter Boockvar, chief investment officer of Bleakley Advisory Group, said in a report: “the volatility in the oil market is incredible and we are really running out of space. “In May and June, when the market starts to reopen, that will help a lot.”
Tom Kloza, a veteran of market analysis with 40 years of trading experience, laments: “whether you are 120 years old or 20 months old, no one has ever seen this negative oil price and I don’t know how to deal with it.” He is the global head of energy analysis for Oil Price Information Service (OPIS), a global Oil industry Price, news, analysis and software provider.
Tom Kloza warned that it would be a mistake to interpret current price movements as a trend. “The price just tells you that all the oil that is currently in storage is accounted for,” he said. “if you want to ask for delivery, you better have a place to put the oil, or a pipeline to put the oil, or you’re really screwed.”
US President Donald trump said at a White House news conference that the us could buy about 75 million barrels of oil to boost its strategic reserves, or lease idle storage capacity to oil companies that have been squeezed by oversupply.
“Now is a good time to buy oil,” Mr Trump said. We can buy it at the right price. Nobody has ever heard of oil going negative before.”
But Goldman sachs warned that the collapse was a “symptom” of an unprecedented oversupply in the oil market. There could be “potential for further trouble” for may WTI oil futures. Next up is “downward pressure” on the WTI oil contract for June.
In early Asian trading on Tuesday, U.S. WTI crude for may jumped more than 105 percent to get back above the $0 mark, while the June contract rose 5 percent to get back above $21.
Gold bulls again aim for 1700
International spot gold again challenged the $1,700 mark on Monday after a sharp drop in oil prices sparked a renewed risk aversion among investors, giving gold some buying support. Investors turned their attention to gold following the collapse of WTI crude oil futures in May.
Spot gold rose as much as 1 per cent on Monday as the fall in us crude oil prices to a record low hit risky assets and sent investors into the safety of gold.
International spot gold rose as high as $1701.90 an ounce on the week, and fell as low as $1670.89 to close at $1694.82, up $10.63 or 0.63 percent. Spot gold was near $1,691 an ounce in early Asian trading on Tuesday.
“Gold rallied on bets that the unprecedented global monetary stimulus will only increase,” said Edward Moya, senior market analyst at broker OANDA. “after the historic collapse in the oil sector, this is a reminder to everyone that global economic activity is far from normal.”
Jim Wyckoff, senior analyst at Kitco.com, said gold has benefited from the sharp drop in oil prices. “This is bullish from a safe-haven demand perspective, given the collapse in crude oil prices and extreme market anxiety,” he wrote.
Strategists at td securities said they expect gold to hover around support before recovering. While risk appetite is also on the rise, interest in gold has increased as volatility has eased, with fund managers sharply increasing long positions in the metal. The market is also positioning gold in response to a weakening of the dollar, which has pushed gold prices to multi-year highs.
According to Economies.com, gold is poised for a big rebound if it breaks through a key resistance of $1,711.00 an ounce.
Economies.com noted that gold continued to move around $1,678.45 an ounce, and that gold had failed to break effectively below this key level. Gold held between key support of $1,678.45 an ounce and key resistance of $1,711.00 an ounce. It will maintain a neutral stance on the gold outlook until it confirms a break through the support or resistance.
If gold falls below $1,678.45 an ounce, that would lead to a more bearish correction, with $1,635.80 the next main target, according to Economies.com. If gold breaks through resistance at $1,747.00 an ounce, it will help restore the main bullish trend, with the first target at a recent high of $1,747.43 and then $1,775.00.
Who has warned that the worst is coming
According to the latest statistics, the total number of confirmed covid-19 cases worldwide has exceeded 2.48 million, and the total number of deaths has exceeded 170,000. At present, there have been six countries in the world with more than 100,000 confirmed cases, among which the United States is still the country with the largest number of confirmed cases in the world, with more than 790,000 confirmed cases and more than 42,000 deaths.
Worldometers world real-time statistics show that as of 9:02 PM Beijing time on April 21, the global covid-19 cumulative confirmed cases of more than 2.48 million, reached 2481,026, the cumulative number of deaths reached 170423.
The cumulative number of confirmed COVID 19 cases in the United States was the highest in the world, with more than 790,000 cases and 792,759 cases. The cumulative number of deaths exceeded 42,000, reaching 42,514.
The us department of homeland security on April 20 announced a 30-day extension of “non-essential travel” restrictions on the us border with Canada and Mexico in response to a new outbreak.
Us vice President mike pence, head of the White House COVID 19 response team, said in an interview that the federal government will continue to encourage state governments to restore normal life in individual states while ensuring safety. Having opened up all the testing laboratories in each state, we are confident that all states will have the conditions to lift the restrictions as soon as possible.
US President Donald trump on April 11 declared Wyoming a “state of major disaster” for the new outbreak. For the first time in U.S. history, all 50 states, Washington, d.c. and four overseas territories — the U.S. virgin islands, northern mariana islands, Guam and Puerto Rico — are in a “major state of disaster.”
Being granted a “major disaster status” would receive federal aid and allow local governments to exercise emergency powers to protect lives, property and public health after a disaster.
Other major overseas countries, Spain COVID – 19 accumulative total of 200210 cases of the patients, Italy has confirmed 181228 cases, confirmed 155383 cases of France, and Germany has confirmed 146653 cases, the diagnosis of 124743 cases, Turkey has confirmed 90980 cases, Iran has confirmed 83505 cases, Russia has confirmed 47121 cases, Brazil accumulative total 40581 cases, Belgium has confirmed 39983 cases, Canada has confirmed 36670 cases, the Netherlands confirmed 33405 cases over the Swiss confirmed 27944 cases.
A lack of solidarity is fuelling the epidemic, and “the worst is coming,” world health organization (WHO) director general dimitri tandesay said at an April 20 news conference in Geneva.
A novel coronavirus is a very dangerous virus. “Don’t use this virus as an opportunity to fight each other or to score political points,” he urged. It’s dangerous. It’s like playing with fire.” He warned that “the worst is yet to come” if there is no greater solidarity within and between countries.
In a video conference with G20 health ministers on April 19, tan said he thanked the G20 leaders for their commitment to further strengthen who’s role in coordinating the international fight against the epidemic, and thanked Saudi Arabia for contributing us $500 million. All are facing an unprecedented global health crisis, not only with a new virus, but also with the first ever pandemic caused by a coronavirus, tandesai said.
G20 health ministers issued a statement on 19 April saying that countries should improve their preparedness for pandemics and stressing the importance of using digital solutions in current and future pandemics.
The statement also indicated that G20 health ministers would take further action if needed to contain the outbreak and meet again if necessary.