09:31 AM ET 04/20/2020
U.S. crude oil prices plunged Monday as demand dives and storage capacity dwindles amid the coronavirus pandemic.
West Texas Intermediate futures for May delivery, which expire Tuesday, plunged 39% to $11.25 per barrel, a 21 year-low. Brent crude oil prices fell 6.4% to $26.29 per barrel.
Meanwhile, the more actively traded June U.S. crude futures tumbled 11% to $22.07 per barrel, and July U.S. crude futures were down 5% to $28 per barrel.
U.S. crude is in the largest contango ever seen, meaning future oil prices in forward months are above current prices. The situation is the opposite of normal pricing, which decreases in more distant, or forward, months.
OPEC and top non-members, together known as OPEC+, agreed to cut 9.7 million barrels of production a day in May and June, their deepest ever earlier this month. Oil majors and independent U.S. firms have scaled back capital spending and rig counts as demand dries up.
But the reductions in supply still aren't expected to match the collapse in demand, leaving the globe awash with oil as countries lock down and restrict travel to prevent the spread of the deadly coronavirus.Yesterday:
"Some of the selling pressure will ease once we will get through the day delivery tomorrow," Phil Flynn, senior market analyst for the Price Group, told IBD. "Then the market can be optimistic that next month is going to be better, see some buying coming back into the market. A month from now we might see OPEC cuts go into full effect. We may see some cities reopening."...MORE
"Crude oil held in sea storage hits new record at 160 million bbls: sources"
And with the front end in total collapse, the cash-and-carry contango is as steep as anyone has ever seen.
The expiring May contract is changing hands at $15.07 down $3.20 with the soon to be front month Junes at $23.65 down $1.38 and the July contract at $28.50 down $0.92.
Amazing.
