it's pretty clear that a major issue in the market is a glut in the United States and lack of storage capacity.
On Tuesday , Oil prices rebounded, with U.S. crude turning positive after trading below $0 for the first time ever, but gains were capped amid unresolved concerns about how the market can cope with fuel demand decimated by the corona-virus pandemic.
U.S. West Texas Intermediate (WTI) crude for May delivery was down at a discount of $40.03 a barrel in the previous session.
The May contract expires on Tuesday, while the June contract, which is more actively traded, jumped $1.72 cents, or 8.4%, to $22.15 a barrel.
Global benchmark Brent crude for June delivery was up 49 cents, or 1.9%, at $26.06 per barrel.
Oil prices have skidded as travel restrictions and lock-downs to contain the spread of the corona-virus curbed global fuel use, with demand down 30% worldwide. That has resulted in growing crude stockpiles with storage space becoming harder to find.
The main U.S. storage hub in Cushing, Oklahoma, the delivery point for the U.S. West Texas Intermediate (WTI) contract, is now expected to be full within a matter of weeks.
Faced with the situation, the Organization of the Petroleum Exporting Countries (OPEC) and its allies including Russia, a grouping known as OPEC+, have agreed to cut output by 9.7 million barrels per day (bpd). But that will not take place before May, and the size of the cut is not viewed as big enough to restore market balance.
Meanwhile, U.S. crude inventories were expected to rise by about 16.1 million barrels in the week to April 17 after posting the biggest one-week build in history, according to five analysts polled by Reuters. Analysts expected gasoline stocks to rise by 3.7 million barrels last week.
Comments