SunSirs: Energy, The Collapse of the Crude Oil Market Spread, with Dubai relatively Stronger than Brent
April 23 2020 10:56:00 SunSirs (Selena)
WTI crude oil fell nearly 70% in June. The WTI crude oil contract for May delivery fell below zero for the first time in history on Monday, and panic selling spread to the contract for June delivery on Tuesday.
Although negative oil prices should be fleeting as WTI crude oil futures due for delivery in may expire on Tuesday, the psychological impact will continue, indicating that crude oil producers will still be hit hard for some time to come. Western exchanges are both referees and athletes, and the stability of pricing system has been distorted. When the disaster comes, the traditional cognition will change. The risk of thinking with experience, habits and inherent patterns is huge. The appearance of negative oil price distorts the pricing price system and the market may fail. If the low oil price lasts for a period of time, it will accelerate the bankruptcy of oil companies and the reshuffle of the industry, and there will be systemic risks and trust crisis.
It was suggested that Dubai Oman will be relatively stronger than Brent for a period of time that was, Brent was relatively weaker than Oman. The price difference between Brent and Oman has fallen to -0.6 from 2.05 on April 20, and EFS has fallen to -6.1 from -4.03. Today's SC decline is expected to be smaller than Brent's. Last Thursday, the price difference for long gasoline cracking was raised to $40/ barrel from $9/ barrel at that time. GSE will allow negative oil options to be listed today, and ice is preparing for negative Brent crude oil contract prices.
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