Is "negative oil price" coming? You need to know these questions
Monday (April 20) US crude oil futures fell to a negative value for the first time. May Oil's May contract closed down 171.7% at -13.1 USD / barrel. The intraday drop was over 300% and the lowest was -40.32 USD / barrel. The May contract will expire on Tuesday. US oil June contract closed down 15.22%, reported at 21.22 US dollars / barrel. Cloth oil June contract closed down 5.89%, reported at 29.72 US dollars / barrel.
Why are there negative oil prices?
Yan Jiantao, deputy general manager of Longzhong Information, said that the most important factor currently affecting oil prices is not production costs, but inventory, especially in inland oil-producing areas. The epidemic caused problems such as poor infrastructure and transportation and logistics, and crude oil was difficult to export or store. Closing wells and shutting down production purely for economic reasons is risky, so production continues. If the storage capacity of the storage tank is insufficient or the storage cost is too high, the producer would rather accept the negative oil price and have to lose money to let the buyer pull away.
Similarly, the team of analysts of Jinlianchuang told the Beijing News that the reason for the negative oil price was that the tight storage capacity caused the oil price to fall into a capital rush. Because most of the United States is still blocked by the new coronary pneumonia, the only potential crude buyers are entities such as refineries or airlines that need to actually deliver, but after the continued weakness in terminal demand in the past few weeks, these The idle storage space of large physical enterprises is in a very scarce situation, so there is no intention to purchase further oil stocks. In the context of the blockade, the market ’s oil storage space has gradually approached the limit after continuing to accumulate for the first few weeks. The transportation cost of the region has exceeded the special scenario of "the commercial value of oil itself". Therefore, in the case of the WTI spot May contract facing the closing after the closing on the 21st, but there is a large amount of open positions, in the transaction on April 20, the contract was completely caught in the short-selling market. .
Why is May Oil negative in May?
Earlier comments said that a series of news hit the market before the May contract expires, including the International Energy Agency (IEA) last week predicted that global oil demand this year will be reduced by 9.3 million barrels per day compared with last year, and demand in April will be Reduced by 29 million barrels per day to the lowest level since 1995. The US Energy Information Administration (EIA) announced last week that last week US crude oil inventories increased by more than 19 million barrels, a record growth for two consecutive weeks and an increase for 12 consecutive weeks.
These figures mean that traders will soon have insufficient space to store crude oil. For traders, if you do not close the May long contract, it means that you will receive oil spot, and only a few days to tell the seller how to receive the goods. But it is no longer possible to find oil storage space. The May contract has become a hot potato for pure virtual traders.
Reporter Zhang Shuxin
Question "negative oil prices"
Now go to gas, the gas station is looking for money? Can oil stocks be bought? How long can low oil prices remain? What is going on with the "three kingdoms killing" oil price? What are the effects of negative oil prices? The Beijing News invited Zhao Xijun, deputy dean of the School of Finance, Renmin University of China, and Xiao Lanlan, deputy dean of Tianfeng Futures Research Institute, to make an interpretation.
Now go to gas, the gas station is looking for money?
Xiao Lanlan: This is a paragraph, don't take it seriously. China has a product oil price adjustment mechanism, the so-called floor price concept. When the international oil price drops below US $ 40 per barrel, the NDRC will basically not adjust the price of refined oil. Prior to this, the price adjustment of refined oil has experienced two strandings. The last price reduction was in mid-March. The price of gasoline fell by 1,015 yuan per ton, and diesel by 950 yuan per ton. So for more than a month, the price of refined oil has returned to the rare 5 yuan era.
Can crude oil futures June contracts and oil stocks be bought?
Xiao Lanlan: I think it is necessary to wait for the outbreak of the epidemic, improve the demand for crude oil, and reduce the pressure on inventories before considering.
Zhao Xijun: For some large oil consumers, the decline in oil prices will reduce costs and increase profits for them. For companies that produce or process oil products, falling oil prices will squeeze profit margins.
How long can low oil prices remain?
Xiao Lanlan: Now the global supply pressure is very large, and you may face the risk of full tanks. The crude oil produced is nowhere to go, only sold through the spot, so we may still see negative oil prices. The most important thing depends on the development of the epidemic. The global crude oil (demand) loss due to the epidemic is nearly 30 million barrels per day.
What is going on with the "three kingdoms killing" oil price?
Xiao Lanlan: It is mainly Saudi Arabia, Russia, and the United States about the oil price game. The original US import dependence is nearly 50%. Since the shale oil revolution began in 2011, the growth rate of American shale oil has been very fast. Afterwards, we can see that OPEC + crude oil exporting countries, including Saudi Arabia and Russia, have been passively ceding market shares, and the current US crude oil production ranks first in the world.
What impact will negative oil prices have on global financial markets?
Zhao Xijun: The impact is very large, because many financial institutions will help customers or invest in petroleum products as part of the configuration. The most direct is the financial institutions that provide financing for shale oil companies. Due to the bankruptcy of these shale oil companies, it may be involved, or at least liquidity risk, credit risk. Reflected in the market, it will affect the confidence of the entire market.
What impact does negative oil prices have on the global energy market?
Xiao Lanlan: You can refer to the wave of low oil prices in 2016. I think the greater impact may be on the upstream industry, which is supported by investment and financing. There will be a significant contraction in the future. The current US shale oil bonds are basically junk bonds. After the plunge, interest rates reached extremely low levels. Shale oil or oil companies have no capital attraction in the context of low oil prices. I think the investment and financing situation in the global energy market will be sluggish in the next few years.