Home Featured Crude Oil Futures Tank Nearly 25%

Crude Oil Futures Tank Nearly 25%

Crude Oil Futures Tank Nearly 25%

Crude oil prices tanked on Monday amid mounting fears that storage at Cushing, Oklahoma, could reach full capacity soon and that production cuts might not be enough to counter the huge fall in demand amid the coronavirus pandemic.

West Texas Intermediate Crude oil futures for June ended down $4.16, or 24.6%, at $12.78 a barrel. That was the second lowest settlement ever for a front-month contract.

Brent Crude futures shed about 6.75% as it settled at $19.99 a barrel.

WTI futures for June ended up $0.44, or 2.7%, at $16.94 a barrel on Friday. The contract shed about 32% last week. So far this year, WTI futures have lost around 70%.

Earlier this month, the Organization of the Petroleum Exporting Countries (OPEC) and its allies including Russia, a group known as OPEC+, pledged to cut output by an unprecedented 9.7 million barrels per day in May and June.

Russia is very likely to reduce its western seaborne exports by half in May.

Amid the rush to cut output, rig counts in the United States are down to the lowest since July 2016, while the total number of oil and gas rigs in Canada has fallen to the lowest since at least 2000, according to Baker Hughes data.

Expressing their outlook on the global oil storage capacity and its implications on oil prices going forward, analysts at Goldman Sachs Group said the swelling glut will test storage capacity limits in as little as three weeks.

Reports that the United States Oil Fund has said that it would sell all of its contracts for June delivery beginning Monday, in favor of longer-term contracts, also weighed on oil prices.

The material has been provided by InstaForex Company – www.instaforex.com