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Oil prices continue to recover

2020-04-23T06:10:29.769Z


The situation on the oil market remains dramatic, even if prices are just rising again.


The situation on the oil market remains dramatic, even if prices are just rising again.

Singapore (dpa) - The slight recovery in oil prices continued this Thursday morning. In the wake of the double burden of supply and demand slump due to the corona pandemic, the oil market remains tense.

In the morning, a barrel (159 liters) of the North Sea Brent last cost $ 21.80. That was $ 1.45 more than the previous day. The US WTI was traded at $ 15.21 per barrel. It was $ 1.46 more than on Wednesday. At the start of the week, the price of a futures contract on US oil that had expired had fallen below the zero line. It was the first time that the WTI price was negative.

In addition to concerns about sufficient crude oil storage capacity, the reason for this fall in prices was also due to bottlenecks at the Cushing delivery terminal in the US state of Oklahoma. However, the price of European oil also suffered. On Wednesday, it fell to $ 15.98, the lowest level since 1999. In the afternoon, however, prices recovered visibly.

Decisive for the then rising oil prices was a threat from US President Donald Trump to Iran. Trump tweeted that he had instructed the U.S. Navy to destroy Iranian ships if they got in the way of American ships. The background was an incident on the open sea. After Trump's threat, risk premiums on the oil market rose. The relationship between the United States and oil-rich Iran is heavily strained.

But this recovery could not last, according to the ICE Futures Europe commodities exchange. The trading platform that was decisive for the Brent price already announced on Tuesday that it was also preparing for negative prices for the North Sea variety. As long as production cuts don't keep pace with the slump in market demand, the company expects prices to be near or below the zero line. Meanwhile, traders are also adapting their risk models to the new realities.

Despite the recent price increases, the situation on the oil market remains tense. It is characterized by a massive drop in demand due to the corona crisis, a much too high supply and low storage capacity. Most recently, the American Petroleum Institute (API) reported another strong increase in American crude oil stocks. The U.S. Department of Energy followed on Wednesday and also announced a significant increase in oil stocks.

Market observers also recently viewed the turbulence on the oil market as more than just an anomaly in futures trading. "Although some see the negative WTI prices at the beginning of the week as a captain of the future market, it is an ominous sign," said Victor Shum, vice president of energy consulting for the British market research institute IHS Markit. It shows the brutal market forces that are forcing producers to adjust to a much lower global oil demand.

Source: merkur

All news articles on 2020-04-23

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