Crude edges higher, U.S. gasoline slumps over 30% on sinking demand [Reuters] 24 Mar, 2020

Brent crude LCOc1 futures ended the session up 5 cents at $27.03 a barrel while West Texas Intermediate (WTI) crude CLc1 futures for May delivery rose 73 cents, or 3.2%, to $23.36 a barrel. Both benchmarks traded in negative territory until late in the session. Gasoline futures RBc1 in the United States, the world’s top consumer of the motor fuel, tumbled 32% to settle at about 41.18 cents a gallon, their lowest on record. That was the biggest daily percentage drop ever, and also sent the profit margin RBc1-CLc1 to produce gasoline into negative territory. “There’s nobody driving, there’s no business, there’s nobody that needs gasoline, and not only that, it could get a lot worse,” said Bob Yawger, director of energy futures at Mizuho in New York. The United States consumes more than 9 million barrels per day of motor gasoline, nearly half the nation’s daily oil consumption, and with residents confining themselves and businesses shut, demand is falling precipitously. Analysts also attributed the fall in gasoline prices to the U.S. Senate’s failure to pass an estimated $2 trillion package to boost the economy, as fuel demand is tied to economic output. Crude futures were slightly stronger on hopes that government and central bank stimulus might boost world economies, and that Saudi Arabia and Russia might reconcile after their deal to cut oil production fell apart more than two weeks ago. Both crude benchmarks have dropped for four straight weeks, with WTI slumping 29% last week, its steepest slide since the outset of the U.S.-Iraq Gulf War in 1991. Oil prices have lost about half their value since Saudi Arabia and Russia scuttled an agreement between them and other major oil producers to curb supply. Now, those nations are pumping full-bore and ramping up exports. Oversupply is so extreme that the United States plans to send a special energy envoy to Saudi Arabia to work with the kingdom on stabilizing the global oil market, U.S. officials said on Friday. Bankers, analysts and producers are downgrading demand forecasts by the day, with numbers fluctuating around a loss of around 10 million bpd. Oil demand this year will fall 2.8 million bpd, the largest single-year drop in nearly 40 years, Morningstar analysts projected. Refining margins for gasoline and jet fuel have tanked because of decreased demand for transportation fuels, as the pandemic has forced businesses to close and governments to push residents to avoid travel and public places. Many oil companies have rushed to cut spending and shareholder payouts while refiners worldwide are slashing production or considering cuts as demand for fuel evaporates. The physical market at Cushing, Oklahoma, the delivery point for WTI futures signaled heavy oversupply with prices to roll positions forward to the next month sinking to the weakest in nearly a decade. Related CoverageCrude oil futures rise, but support seen weakFactbox: Global oil, gas producers cut spending after crude price crashThe six-month spread of Brent futures LCOc1-LCOc7 hit its steepest since 2009 at a discount of around $9, a contango structure which reflects the current oversupply. Oil prices have dropped more than 60% since the start of the year, while everything from coal to copper have also been hit by the coronavirus crisis, and bond and stock markets are in rarely charted territory. [MKTS/GLOB] “Set against this dismal outlook, the downward spiral in oil prices is poised to continue and may well reach the mid-teens. Put simply, the search for a price floor is by no means over,” PVM analysts said in a note. Our Standards:The Thomson Reuters Trust Principles.

More News

U.S. will allow Chinese passenger carriers two flights per week

06 Jun, 2020 Reuters

On Wednesday, President Donald Trump’s administration said it planned to bar all Chinese passenger airlines from flying to the United States by ... Detail

Pakistan-ADB pen $300 million emergency loan agreement

06 Jun, 2020 The Nation

ISLAMABAD - The Asian Development Bank (ADB) and the Government of Pakistan on Friday signed the agreement for a $300 million emergency assistance loa ... Detail

Exclusive: Buyout firm Sycamore Partners in talks to buy J.C. Penney - sources

06 Jun, 2020 Reuters

J.C. Penney, which employs roughly 85,000 people, filed for bankruptcy protection in May after the coronavirus pandemic forced it to temporarily close ... Detail

Reddit co-founder Ohanian resigns from board, wants a black candidate to take over

06 Jun, 2020 Reuters

(Reuters) - Reddit co-founder Alexis Ohanian said on Friday he has resigned from the board and sought to be replaced with a black candidate at the soc ... Detail

Tech drives Nasdaq to all-time high as signs of recovery emerge from coronavirus pandemic

06 Jun, 2020 Reuters

The Nasdaq’s 43% rise since late March puts the tech-heavy index far ahead of the broader S&P 500, highlighting investors’ willingness to ... Detail

Post Your Comments
Type your Comments / Review in the space below.
Name:
Email:
City:
Verify Code