Crude oil is crushing for fear of renewed demand

Exxon gas station at night in Dallas, Texas, United States, April 27, 2016.

US oil prices fell 7% on Tuesday. 36.76 is at the level of 76. It was the worst day of crude and the lowest price in almost three months. At one point, the oil was down as much as 9%. For the first time since the end of June, the world benchmark Brent crude bar has fallen below 40 dollars.

“Demand is low,” said Robert Yaver, director of energy futures at Mizhoho Securities. The supply is on. “Existing economic laws on both sides of the spectrum are being violated.”

OPEC director general Saudi Arabia has since sold off its official selling price in Asia and the United States. Bloomberg News Report. That’s never a good sign when the world’s leading oil exporter is forced to cut prices to draw buyers.

“It’s a double-blink warning signal,” Yavar said. “There is an OPEC-type panic today, sending a bad signal to the OPZ community.”

‘Avalanche of selling orders’

The latest upheaval in the oil market comes during a major upheaval in the stock market.

The Nasdaq sank Tuesday for the third day in a row and flirting with a 10% correction from record highs. Like the main epidemic winner Tesla (TSLA), Apple (AAPL) And Zoom (ZM) Below is more.

Jeff Wyle, an energy analyst at Newberger Burman, said oil was being caught in a risky trade. He added that “nothing has changed” in the basic supply / demand picture for oil “to warrant such a drop.”

Just as investors are hitting exits in tech stocks, they are not betting on crude oil.

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“Everyone is trying to get out together. There’s an avalanche of sell orders,” said Mizuhona Yawar.

Investors are also rushing into oil stocks.

Apache (What), Occasional Petroleum (OXY) And Diamondback Energy (Feng) All fell more than 6% on Tuesday. ExxonMobil (XOM), Which was last month Dow kicked out, Another 3% retreated.

Poor air travel demand is disappointing

With this epidemic, the price war between Russia and Saudi Arabia, this spring oil prices skyrocketed. U.S. Oil prices also turned negative for the first time in a short time, ending at 40 40 a barrel.

But unprecedented production cuts from OPEC and Russia helped revive the V-shaped recovery in the energy market. Seven weeks after bottling, US crude returned to ડ 40 a barrel. Which OPEC and Russia agreed to Gradually increase production from very low levels.

The good news for oil bulls is that demand for gasoline has fallen sharply.

Road traffic is almost complete and Bank of America hopes that global oil demand will continue to grow positively year-over-year with the use of roads in the next few months. That helped lift the national average gasoline price to 2.22 a gallon, down from a low of 7 1.77 at the end of April.

The bad news is that air travel is nowhere near pre-covid levels – and that keeps jet fuel demand very frustrating. As CNN Business Recovery Business Acquisition Tracker As of Monday, only 940,000 people were processed by TSA security lines, down 59% from a year earlier.
Business travel is not possible Unless there is widespread use of a coronavirus vaccine United Airlines (UAL) Chairman Scar Munoz recently told CNN Business.

That’s why Bank of America warned in a report late last week that it would take three years for global oil demand to “normalize”.

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“Global oil demand is really sluggish,” said Michael Tran, managing director of global energy strategy at RBC Capital Markets. All the lesser fruits of global oil recovery have stalled.

When will the crude bottom?

Trun warned that fundamentals in the oil market are likely. “Will continue to be weak through the fall.”

So how low can crude go?

Even at the bottom of Tuesday, the U.S. Oil prices are still trading above $ 75 Negative price hit April 20. But energy analysts don’t expect a repeat of this journey below zero, perhaps again.

The U.S. estimates that crude will not fall far below $ 30 a barrel as OPEC resumes at that time.

“I don’t think we’ll go to the abyss again like spring.”

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