Thread by @Sanju_Verma_

#WTI #CrudeOil futures for May,expiring tomorrow,tanked 57%,to $7.98 per barrel

June contract,expiring on 19thMay, traded@ $26.62/barrel

July futures,traded@ $28/barrel

And all this,despite #OPEC's decision to cut supply by 9.7 million barrels a day,wef 1st May2020

#OilCrash

Normally,spread between #Spot &one month forward contract,is 40-50 cents

This time,spread is $10-12,implying weakness in #crudeoil,will continue

Global demand for #Oil in April 2020,was lower by 29 million barrels per day,Vs April 2019

#COVIDー19&global #lockdown, playing out

Indian #Crude basket is a derived basket of #crudeoil comprising #sourcrude(Dubai&Oman)&sweet crude(Brent)

Indian basket,aligned to #Brent crude,has fallen too,but not as much as #WTI crude

April 2020 #Brent@$20.92 per barrel March $32.01
Feb $55.70
Jan 2020@ $63.83

#OilCrash

#Exxon&its partners,#HessCorp &China's #CNOOC,started production at the Stabroek block in Guyana in December 2019; #StabroekTripletail #Oil block,the 16th discovery by Exxon group, brings total recoverable oil&gas reserves in #GuyanaOffshore,to over #8BillionBarrels😨

#OilCrash

Unbelievable😱!

Oil futures for May have slipped to $0.01 per barrel,even as i tweet this,on fear of rapidly falling global storage facilities caused by #coronavirus;Fear in market that, US storage facility will run out of space by mid-May

In Canada,#WTICrude,trading negative

Traders have hired vessels just to anchor them&fill them with the excess oil;A record 160 million barrels is floating in tankers,around the world

Cushing at #Oklahoma is out of capacity,with stockpiles already@ 61 million barrels;There are fears,#Oil may be dumped into the ocean

Not a big fan,but #MarcFaber is the only one who said in 2016,#Oil could collapse to $15 per barrel

Will it stay at today's crazy level of $0.01?No-As Faber said,if Oil stays at sub $50 or $60 per barrel for 3 yrs in a row,#SaudiArabia will go kaput&they will not let that happen

#SaudiArabia,accounting for 15% of world output,is largest #Oil producer globally,but of late,it is not Saudi led #OPEC,but non OPEC member,#Russia,the 2nd largest Oil producer,that has been dictating direction of global #CrudeOil price!

And Russia does not like production cuts

While Russia &OPEC have,agreed to slash Oil production by a steep 9.7 million barrels per day,for how long Russia will toe the Saudi line in OPEC,remains to be seen..#Putin has never really favoured supply cuts&he will ensure Russia starts pumping record #Crude,sooner than later!

In a nutshell,global #CrudeOil price will be determined by Saudis,Putin's hard nosed Russia&ofcourse,the USA-ahead of elections,Trump would like to keep #CrudeOil prices low,but if with help from Saudis,he keeps them too low,US Oil refiners will go bust,pushing US into recession!

While weak global demand,post #coronavirus pandemic,will not allow #CrudeOil to breach upper limit of $50 or $60,the downside too,is limited,as #Trump knows,very low prices could sound death knell of US #Shale wells!Oil may settle in $30-$50 range,but with heightened volatility!

Today,#BrentOil plunged to 18yr low

Brent (sourced from North Sea) is trading at $19 per barrel,down 25% today alone,following slump in US #CrudeOil below zero,to minus $40,last night

#Brent is weakest since 2002 &could see huge volatility ahead of futures' expiry on 30thApril

#WTI is sourced from US oil fields in Texas,Louisiana&North Dakota

WTI,with lower sulphur content (0.24%) Vs Brent (0.37%),is considered sweeter;Both Oils are relatively light,but #Brent has higher API gravity,making WTI,lighter of the two

Europe,Middle East&Africa use Brent

Sharp divergence between #WTI& #Brent is seen as,WTI needs to be delivered physically at Cushing, Oklahoma(US),whereas for Brent contracts,deliveries can be done offshore at multiple locations

#Okhalama is landlocked,making transportation of #WTICrude difficult during #COVIDー19

India has StrategicPetroleum Reserves #SPR,of 37million barrels,akin to 16 days of consumption--would be a good idea to stock up now,as every Dollar fall in price of #Brent,saves India $1.5 billion,by way of lower import bill,lower trade deficit&lower current account deficit(CAD)

#BrentFutures are trading at👇

June2020 Futures at $25.57
July @ $29.21/barrel
Aug@ $31.51
Sep@ $33.33
Oct@ $34.75
Nov@ $35.71
Dec@ $36.39
Jan 2021@ $37/barrel

It is clear,#Brent price is capped at $40 for next 7 months,unless there's some unforeseen supply disruption,globally