Sino-Singapore Jingwei client April 21st US crude oil futures prices plunged on the 20th local time, WTI crude oil futures prices delivered in May plunged by about 300%, to close at -37.63 US dollars per barrel, the first time history fell into a negative value, the market The lowest bid was $ -40.32 per barrel.
WTI May crude oil futures day K-line source: Wind
It is understood that negative oil prices mean that the cost of transporting oil to a refinery or storage has exceeded the value of oil itself.
Market participants believe that this abnormal drop in oil prices is related to the approaching of the delivery date of the WTI crude oil May contract. According to CME Group, the May contract will be settled on April 21 local time (02:30 am Beijing time on the 22nd). Most brokers will extend from April 16th to 20th. In order to avoid being forced to close positions, some traders often close the May contract in advance and re-establish the position under the June contract, resulting in a lot of selling in the May contract and a sharp drop in prices. Generally speaking, the difference in oil prices between adjacent months will not be too large, but the difference between WTI May crude oil futures and June crude oil futures has exceeded US $ 60 per barrel as of press time.
According to a CCTV financial report, it is not ruled out that some crude oil buyers on the market deliberately lowered the price of May crude oil futures and bought crude oil on dips.
In addition, limited crude oil storage capacity is also an important factor affecting oil prices. Stephen Innes, global chief market strategist at AxiCorp, wrote in a research report on Sunday, local time: "The New York Mercantile Exchange's expiring May 2020 WTI near-month contract makes prices more complicated than ever." The strategist also pointed out that due to the large premium in storage fees and the recent sharp discount in crude oil prices, the environment for these upcoming contracts is very bad.
It is reported that the US crude oil storage space has become urgent. According to data released by the US Energy Information Administration (EIA) in the middle of the week, as of the week of April 10, U.S. crude oil inventories (excluding strategic oil reserves) increased by 19.24 million barrels from the previous week, and changes in U.S. crude oil inventories recorded for 12 consecutive weeks Growth and growth continued to hit record highs. Oklahoma Cushing crude oil inventories increased by 5.724 million barrels, the previous value increased by 6.417 million barrels; Cushing crude oil inventories change value has recorded growth for 6 consecutive weeks.
S & P Global Platts Energy Information analyst Chris Midgley also pointed out that Cushing is an inland city, and the crude oil storage capacity is likely to fill up within 3 weeks. Once filled, it will be more difficult for WTI crude oil futures contracts to be physically delivered. Traders are forced to close their long positions to avoid buying physical crude without storage capacity. (Sino-Singapore Jingwei app)