- Oil: it suffers a historical fall and enters negative territory
Oil focuses attention on the markets on Tuesday, coinciding with a new and notable drop in the price of a barrel in the US. The West Texas Intermediate (WTI), which is taken as a benchmark in the North American country, leaves more than 11% this Monday and is on the verge of losing $ 11 due to the fall in demand and the storage problems faced by producers in the country due to the effects of the coronavirus on global consumption.
Last week's milestone, when American crude first entered negative territory, was also a red flag. Judging by analysts and investors, the problems for black gold could only have started, and not just in the US.
In Europe, where Brent is taken as a reference , the price of a barrel is rising less than 1% this Tuesday and remains at around $ 20, a level also committed for producers.
The market is saturated and although OPEC and allies like Russia (OPEC +) have agreed to reduce production, that decline does not compensate for the decrease in world demand and the imbalances continue.
"It is quite obvious that OPEC + will have to meet again shortly to adjust its strategy," says Axel Botte, strategist at Ostrum AM (a manager at Natixis IM).
In the US, the situation has pushed many companies that extract oil through the fracking technique to the limit, and some have announced their bankruptcy. The last one, on Monday afternoon, was Diamond Offshore , which drills at sea using 15 platforms with equipment working for Hess, Petróleo Brasileiro or BP.
"The company was already recording losses before black gold demand fell, including losses on its financial statements of $ 357 million in 2019, doubling the figure for 2018. In the last four years, the company has recorded losses for value of 1,200 million dollars, obtaining only a profit in 2017 of 18 million, "says Diego Morín, analyst at IG Markets.
"On the other hand, its income fell by around 12% and it has a debt of 2,000 million dollars in the long term, with no more than 170 million dollars in cash. Right now the main objective of the company is to restructure the balance sheet to have a more consistent debt, "he adds.
Diamond follows in the wake of Whiting Petroleum (WLL), which also filed for bankruptcy in early April, and more firms are likely to come. Its falls will help reabsorb excess supply over time, while activity will recover and with it, demand.
Bags on the rise
The falls in crude are not significantly altering the session on the stock markets, which have managed to come back after a relatively flat morning. The Ibex 35 rises more than 1.5% and exceeds 6,800 points boosted by the rises in banking and, especially, in Bankinter (+ 10.5%), BBVA (+ 7.8%) or Santander (+ 5.6%), which presented results this morning.
Elsewhere in Europe, the Frankfurt Dax rose 1.9%; the Cac 40 in Paris, 2%; the Ftse 100 in London, 2.2% and the Ftse Mib in Milan, more than 3%.
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