At Nymex (the New York Mercantile Exchange), the June contract fell 11 per cent to $22.22 a barrel.
With refiners rejecting orders in the US, the physical market may see further pressure on prices, the Bloomberg report said.
Over the last few days in the international market, following reports of storages for oil in the US filling up sharply because of the decreased demand amid lockdown, oil prices have dipped. At 12 midnight IST, WTI was trading at -$6.65 per barrel, nearly $24.92 or 136.40 per cent down. Brent crude, the domain of Opec+, was trading at $25.70 a barrel, $2.28 or 8.48 per cent down.
Gnanasekar Thiagarajan (CEO), Commtrendz Risk Management Services, a risk advisory firm, said: “Huge supplies of shale oil
are reflected in the WTI price. Limited demand and storage woes are putting pressure, resulting in a sharp fall in prices.”
The WTI price fall was so sharp that several retail investors, who had taken long positions, made heavy losses on the MCX.
Ajay Kedia, director, Kedia Advisory, said: “Crude oil prices crashed on the MCX to settle, tracking Nymex crude prices. Retail Investors in India have been making losses since prices dropped below $30 (crude prices were cheaper than a litre of packaged drinking water). Small investors were going long since the last few weeks thinking the price is rock bottom and will again jump, but on the contrary, the prices dropped. The premium for the next month was also on a historical high, which held them from rolling over their position.”
MCX crude oil
futures, most liquid, are based on WTI and hence they have fallen sharply — they have almost halved in less than a month. Usually, WTI crude trades a few dollars below Brent, and hence, whenever the spread between the two rises, arbitragers in the international market take positions accordingly, and some countries shift their demand to shale oil.
in the US and the overall sharp fall in demand following the Covid-19 outbreak have hurt the fundamentals, and the spread between Brent and WTI has widened to a historic high.