Daniel Yergin, a Pultizer prize-winning oil historian and vice-chairman of HIS Market Ltd says, ’The May crude oil contract is going out not with a whimper, but a primal scream’. There is little to prevent the physical market from the further acute downside path over the near term’, said Michael Tran, Managing Director of global energy strategy at RBC capital market. ‘refiners are rejecting barrels at a historic pace and with U.S. storage levels printing to the brim, market forces will inflict further pain until either we hit rock bottom, or COVID-19 clears, whichever comes first, but it looks like the former.

THE REASON BEHIND OIL PLUNGE AROUND THE WORLD AND IT’S EFFECT ON DIFFERENT COUNTRIES
Ruheen Salam
Ruheen Salam

THE REASON BEHIND OIL PLUNGE AROUND THE WORLD AND IT’S EFFECT ON DIFFERENT COUNTRIES

Subscribe Our Official Youtube Channel For Video Articles and Video Blogs (Click Here)

U.S. PLUNGE OF OIL

U.S. oil products turned to negative for the first time in history on Monday as the world saw the fall in demand in 25 years. The cause behind this plunge is due to the spread of Coronavirus COVID-19 around the globe, which has grounded the transport to a halt. Producers have continued to pump crude from their wells which is causing a catastrophic imbalance between oversupplied oil and the biggest slump in demand for 25 years.

According to The Economic Times, since the start of the year prices have plunged after the compounding impact of COVID-19 and a breakdown in the original OPEC+ agreement. With the producers around the world continuing to pump, that is causing a fire-sale among traders who don’t have access to storage. Around the globe, the lockdown has crashed the U.S. oil market. Before Monday’s plunge, buyers in taxes were offering as little as $2 a barrel last week for some oil streams. In Asia, bankers are increasingly reluctant to give commodity traders the credit to survive as lenders grow ever more fearful about the risk of a catastrophic default.

U.S. PLUNGE OF OIL
U.S. oil products turned to negative for the first time in history on Monday as the world saw the fall in demand in 25 years. The cause behind this plunge is due to the spread of Coronavirus COVID-19 around the globe, which has grounded the transport to a halt. Producers have continued to pump crude from their wells which is causing a catastrophic imbalance between oversupplied oil and the biggest slump in demand for 25 years.
 According to The Economic Times, since the start of the year prices have plunged after the compounding impact of COVID-19 and a breakdown in the original OPEC+ agreement. With the producers around the world continuing to pump, that is causing a fire-sale among traders who don’t have access to storage. Around the globe, the lockdown has crashed the U.S. oil market. Before Monday’s plunge, buyers in taxes were offering as little as $2 a barrel last week for some oil streams. In Asia, bankers are increasingly reluctant to give commodity traders the credit to survive as lenders grow ever more fearful about the risk of a catastrophic default.
In New York, West taxes intermediate for May delivery dropped as low as negative $40.32 a barrel. It far below the lowest level previously seen in continuation monthly data charts in 1946, just after 2 world war, according to data from the Federal Reserve Bank of St. Louis. Brent declined 8.9% to $25.57% a barrel. America’s key storage hub and delivery point of the West Texas intermediate contract have jumped 48% to almost 55 million barrels since the end of February. The hub had working storage capacity of 76 million as of Sept 30 according to The Energy Information Administration.
Daniel Yergin, a Pultizer prize-winning oil historian and vice-chairman of HIS Market Ltd says, ’The May crude oil contract is going out not with a whimper, but a primal scream’. There is little to prevent the physical market from the further acute downside path over the near term’, said Michael Tran, Managing Director of global energy strategy at RBC capital market. ‘refiners are rejecting barrels at a historic pace and with U.S. storage levels printing to the brim, market forces will inflict further pain until either we hit rock bottom, or COVID-19 clears, whichever comes first, but it looks like the former.

In New York, West taxes intermediate for May delivery dropped as low as negative $40.32 a barrel. It far below the lowest level previously seen in continuation monthly data charts in 1946, just after 2 world war, according to data from the Federal Reserve Bank of St. Louis. Brent declined 8.9% to $25.57% a barrel. America’s key storage hub and delivery point of the West Texas intermediate contract have jumped 48% to almost 55 million barrels since the end of February. The hub had working storage capacity of 76 million as of Sept 30 according to The Energy Information Administration.

Daniel Yergin, a Pultizer prize-winning oil historian and vice-chairman of HIS Market Ltd says, ’The May crude oil contract is going out not with a whimper, but a primal scream’. There is little to prevent the physical market from the further acute downside path over the near term’, said Michael Tran, Managing Director of global energy strategy at RBC capital market. ‘refiners are rejecting barrels at a historic pace and with U.S. storage levels printing to the brim, market forces will inflict further pain until either we hit rock bottom, or COVID-19 clears, whichever comes first, but it looks like the former.

OIL PLUNGE IN U.K.

Yesterday John Browne told the BBC about the current situation that it reminded him of the 1980’s oil glut with low demand high supply and full of storage, prices will remain week. He said further, the prices will be very low and I think they will remain low and very volatile for some considerable time. There is still a lot of oil being produced that is going into storage and not being used.

U.S. PLUNGE OF OIL
U.S. oil products turned to negative for the first time in history on Monday as the world saw the fall in demand in 25 years. The cause behind this plunge is due to the spread of Coronavirus COVID-19 around the globe, which has grounded the transport to a halt. Producers have continued to pump crude from their wells which is causing a catastrophic imbalance between oversupplied oil and the biggest slump in demand for 25 years.
 According to The Economic Times, since the start of the year prices have plunged after the compounding impact of COVID-19 and a breakdown in the original OPEC+ agreement. With the producers around the world continuing to pump, that is causing a fire-sale among traders who don’t have access to storage. Around the globe, the lockdown has crashed the U.S. oil market. Before Monday’s plunge, buyers in taxes were offering as little as $2 a barrel last week for some oil streams. In Asia, bankers are increasingly reluctant to give commodity traders the credit to survive as lenders grow ever more fearful about the risk of a catastrophic default.
In New York, West taxes intermediate for May delivery dropped as low as negative $40.32 a barrel. It far below the lowest level previously seen in continuation monthly data charts in 1946, just after 2 world war, according to data from the Federal Reserve Bank of St. Louis. Brent declined 8.9% to $25.57% a barrel. America’s key storage hub and delivery point of the West Texas intermediate contract have jumped 48% to almost 55 million barrels since the end of February. The hub had working storage capacity of 76 million as of Sept 30 according to The Energy Information Administration.
Daniel Yergin, a Pultizer prize-winning oil historian and vice-chairman of HIS Market Ltd says, ’The May crude oil contract is going out not with a whimper, but a primal scream’. There is little to prevent the physical market from the further acute downside path over the near term’, said Michael Tran, Managing Director of global energy strategy at RBC capital market. ‘refiners are rejecting barrels at a historic pace and with U.S. storage levels printing to the brim, market forces will inflict further pain until either we hit rock bottom, or COVID-19 clears, whichever comes first, but it looks like the former.

SAUDI-ARABIA AND U.A.E.

According to AP news, It’s been a turbulent week for Saudi-Arabia and U.A.E. already pained by years of economic slowdown and unpopular austerity measures, Gul Arab states now face the most challenging headwind to their stability; crashing oil prices. The one day 25 % drop in oil prices on the next day sent to world’s markets tumbling amid disruption across the globe due to a new fast-spreading virus. In the Gulf, more than $400 billion was sold off in markets on the first two days of trading this week before regaining some of those losses by mid-week.

The volatility comes as Saudi-Arabia crown prince Mohammed Bin Salman embarks on another round of risky gambles. The Kingdom made hard decisions to shut down Islam’s holiest pilgrims to block the spread of corona then crown prince and his elder brother triggered a price war with major producer Russia after Moscow refuses to go along with deeper production cuts to prop up price and demand for oil slows amid the virus’ outbreak.

OIL PLUNGE IN U.K.
Yesterday John Browne told the BBC about the current situation that it reminded him of the 1980’s oil glut with low demand high supply and full of storage, prices will remain week. He said further, the prices will be very low and I think they will remain low and very volatile for some considerable time. There is still a lot of oil being produced that is going into storage and not being used.

EFFECT ON PAKISTAN:

According to The Express Tribune, the slump of around 30% in the world’s oil price has changed the global economic outlook to negative. But it is a positive turning point for the Pakistani economy. As Pakistan is dependent on imported energy can now save around 4-5 billion alone in oil and gas import. Top three research houses of the country developed consensus the central bank is likely to decrease the rate by one percentage point to 12.25% next week ’Pakistan is a net importer of oil with petroleum group imports contributing 25% to the total import…it would be able to save $5 billion per annum on its imports’ Arif Habib Limited Head of Research Samiullah Tariq said in a comprehensive report on ‘oil price Mayhem-A boon for Pakistan’s Economy’ on Monday.

SAUDI-ARABIA AND U.A.E.
According to AP news, It’s been a turbulent week for Saudi-Arabia and U.A.E. already pained by years of economic slowdown and unpopular austerity measures, Gul Arab states now face the most challenging headwind to their stability; crashing oil prices. The one day 25 % drop in oil prices on the next day sent to world’s markets tumbling amid disruption across the globe due to a new fast-spreading virus. In the Gulf, more than $400 billion was sold off in markets on the first two days of trading this week before regaining some of those losses by mid-week.
The volatility comes as Saudi-Arabia crown prince Mohammed Bin Salman embarks on another round of risky gambles. The Kingdom made hard decisions to shut down Islam's holiest pilgrims to block the spread of corona then crown prince and his elder brother triggered a price war with major producer Russia after Moscow refuses to go along with deeper production cuts to prop up price and demand for oil slows amid the virus’ outbreak.
EFFECT ON PAKISTAN:
According to The Express Tribune, the slump of around 30% in the world’s oil price has changed the global economic outlook to negative. But it is a positive turning point for the Pakistani economy. As Pakistan is dependent on imported energy can now save around 4-5 billion alone in oil and gas import. Top three research houses of the country developed consensus the central bank is likely to decrease the rate by one percentage point to 12.25% next week ’Pakistan is a net importer of oil with petroleum group imports contributing 25% to the total import…it would be able to save $5 billion per annum on its imports’ Arif Habib Limited Head of Research Samiullah Tariq said in a comprehensive report on ‘oil price Mayhem-A boon for Pakistan’s Economy’ on Monday.
%d bloggers like this: