Goldman Sachs warns of potential further distress for May WTI futures on Tuesday and cites the June contract to also face ‘downward pressure’ next.
- Oil plunge is symptomatic of unprecedented oil supplies.
The warnings follow a day on Wall Street where oil plunged below zero for the front-month West Texas crude contract that is due to expire today, dropping to minus $37.63 a barrel. There is so much oil in supply that American energy companies have nowhere to store it and if there’s nowhere to keep it, no one wants a crude contract that is about to come due. At the same time, Russia and Saudi Arabia flooded the world with excess supply.
"The price collapse is reverberating across the oil industry. Crude explorers shut down 13% of the American drilling fleet last week. While production cuts in the country are gaining pace, it isn’t happening quickly enough to avoid storage filling to maximum levels,"
– said Paul Horsnell, head of commodities at Standard Chartered.
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