With extreme price swings in global oil markets and uncertainty over demand pickup lingering, experts warn that crude oil prices could slip into the negative territory again.The United States Oil Fund, a popular investment fund, said it would dump its June WTI contracts and reduce contracts for upcoming months. It will now buy into longer-term contracts.
Fearing a price rout, the S&P Dow Jones Indices, too, said all of its commodity indices will roll out of the June contract and into July. S&P Dow Jones Indices sees “the potential for the June 2020 WTI Crude Oil contract to price at or below zero.”
Experts see the announcements as a sign of how much the coronavirus pandemic has caused oil demand to evaporate, leaving the world without much room to store the excess barrels that aren’t being used.
Last week, WTI crude for May delivery fell to negative $40 a barrel shortly before expiry, marking the first time in history that the price of an oil contract had fallen below zero.
According to estimates, the pandemic has reduced demand for oil by close to a third. In early London trading on Tuesday, WTI contract for June delivery fell 20% to a low of $10.07 a barrel before rebounding to $20.34 as of 11.45 IST.
Meanwhile, oil behemoth BP Plc on Tuesday reported a 66% drop in earnings and a rise in debt in the first quarter. “Our industry has been hit by supply and demand shocks on a scale never seen before,” Bernard Looney, BP’s CEO, said in a statement.
Moody’s cuts India growth forecast to 0.2% for 2020
New Delhi: Moody’s Investors Service on Tuesday slashed India growth forecast for calendar year 2020 to 0.2%, from 2.5% projected earlier.For 2021, however, it expects India’s growth to rebound to 6.2%. According to Moody’s, China’s economy will grow by a modest 1% in 2020