Futures, Oil Plunge As Crude Contagion Spreads To All Markets
The experts said ignore the May WTI meltdown – it is irrelevant and is only confined to the deliverable contract. The experts were wrong.
Not only was the Monday May WTI meltdown not contained, with the contract still trading negative after closing down nearly $40 on Monday in their first ever sub-zero dive as traders realized Cushing was on the out of storage space, but overnight it spread to the more-active June contract which crashed almost 50% plunging to the low teens, before stabilizing down 23.5%, to $15.64 a barrel. June trading volumes were roughly 80 times those of the expiring May contract.
…. with Brent also dragged in, dropping as low as $18/barrel and last trading down $5.25, or 21% at $20.32 per barrel…
… as the world’s oil benchmark dropped below $20. And as the oil meltdown accelerated, it inflicted huge losses sweeping through markets as the world runs out of places to store unwanted crude and grapples with negative pricing.
The plunge in oil is taking place even as President Trump said late on Monday that he is looking at putting as much as 75mln bbls into SPR which would top it out and that the oil price drop is short-term in which a lot of people got caught out and was largely a financial squeeze. Furthermore, Trump suggested oil producers need to do more by the market in terms of output cuts and that the administration will either ask permission from Congress to buy oil or we will store it, while he also responded we will look at it when questioned about stopping shipments of oil from Saudi Arabia.
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