TOP NEWS Negative $40 Oil Reflects Panic

TUESDAY, APRIL 21, 2020, U.S. EDITION

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TOP NEWS

Negative $40 oil reflects panic - and U.S. crude market economic reality Traders desperate to avoid owning oil fled the markets on Monday, sending crude futures into negative territory for the first time ever, in recognition that the coronavirus pandemic has sapped demand for fuel and there is not enough storage for the massive glut of oil present on U.S. soil. Investors sold the May futures contract due to expire on Tuesday in a series of waves. At one point the contract hit negative $40. When the trading stopped, crude oil had ended the day at a negative $37.63 a barrel, a decline of some 305%, or $55.90 a barrel.

A hunt for any storage space turns urgent as oil glut grows The telephone lines have been ringing at Adler Tank Rentals in Texas as oil companies found a new use for steel tanks that had been left idle when shale producers stopped drilling - they want to use the tanks to store some of an oil glut that has overwhelmed the market and flipped U.S. crude prices negative for the first time. Hundreds of millions of barrels of crude have gushed into storage worldwide in the past two months as the coronavirus-related lockdowns wiped out around a third of global oil demand.

Remember the 1980s glut: Ex-BP boss Browne warns oil will stay low The oil price will stay low for some time as supply exceeds demand and the current situation on global oil markets is reminiscent of the 1980s oil glut, former BP boss John Browne said on Tuesday. U.S. crude prices dropped below $0 for the first time ever on Monday, with May futures for U.S. crude plummeting to -$37.63 a barrel, though the prices returned to positive territory on Tuesday.

Trump to consider halting Saudi oil imports, says U.S. has 'plenty' President Donald Trump said on Monday that his administration was considering the possibility of stopping incoming Saudi Arabian crude oil shipments as a measure to support the battered domestic drilling industry. "Well, I'll look at it," Trump told reporters at a daily news conference after he was asked about requests by some Republican lawmakers to block the shipments under his executive authority.

As oil collapses, some options players bet on a bounce As U.S. crude prices dropped below $0 for the first time ever on Monday, some options investors were betting on a rebound. Call options - used for upside participation - accounted for around two-thirds of the 3.5 million options contracts traded Monday on the United States Oil Fund LP, the largest U.S. crude exchange-traded fund.

Oil export price for Mexico's Pemex goes negative for first time Mexico's oil export basket closed on Monday in negative territory for the first time ever, according to data published by state oil company Pemex, meaning the firm would have to pay buyers to offload its crude. The average price for the company's crude exports slid to a historic low of -$2.37 per barrel, down 116% since its closing price last Friday. April 21, 2020

COLUMN-Coronavirus havoc is drowning out China's failure to buy U.S. crude, LNG, coal: Russell Lost among the havoc being wreaked on crude oil markets by the new coronavirus crushing the world economy is the complete and utter failure so far of the deal for China to massively increase imports of U.S. energy. It may be tempting to think that the collapse in U.S. crude prices will be enough to bolster the trade, which has only spluttered since Washington and Beijing signed a deal aimed at helping efforts to balance trade between the two.

POLL-U.S. crude stocks seen rising after biggest build ever U.S. crude oil stockpiles were seen extending the surge after posting the biggest one-week build in history, while increases were also expected in refined products inventories last week, a preliminary Reuters poll showed on Monday. Five analysts polled by Reuters estimated, on average, that crude stocks rose by about 16.1 million barrels in the week to April 17.

ADNOC cuts crude supply for term buyers in May on OPEC+ pact - sources Middle East oil producer Abu Dhabi National Oil Co (ADNOC) has informed term buyers it will reduce the supply of crude in May for all four crude grades, two sources with direct knowledge of the matter told Reuters on Tuesday. ADNOC will cut the supply of its Murban and Upper Zakum crude by 15% in May, and reduce the supply of its Umm Lulu and Das crude by 5%, the sources said, citing a letter issued by ADNOC to buyers on Tuesday.

China to grant additional oil import quotas for private refiners-sources China is set to issue more crude oil import quotas to non-state refiners in its second batch of allowances for 2020, several sources at five independent refineries told Reuters on Tuesday. China's Ministry of Commerce will issue quotas totalling 53.88 million tonnes (393.32 million barrels), said the sources, who said they have seen documents outlining the allocations.

ANALYSIS-Saudi Arabia gets physical with Russia in underground oil bout Behind a Saudi-Russian truce to stabilise oil markets with a record output cut, market players are seeing the two production heavyweights still trading blows in the physical market. It is here, rather than in the world of futures prices, that a long-standing battle for market share carries on, particularly in Asia, shipping data analysed on Monday by Reuters shows.

EXCLUSIVE-Russia orders companies to cut oil output by 20% from Feb levels -sources The Russian energy ministry has told domestic oil producers to reduce oil output by around 20% from their average February levels, two industry sources told Reuters on Monday, which would bring Moscow in line with its commitment under a global deal. The Organization of the Petroleum Exporting Countries and other large oil producers led by Russia, a group known as OPEC+, agreed to cut their combined oil output by 9.7 million barrels per day (bpd) in May and June in order to combat oversupply triggered by the coronavirus crisis.

COLUMN-Hedge funds sense crude at turning point but not fuels: Kemp Hedge funds were net purchasers of petroleum futures and options for the third week running last week as managers gambled that the market has already hit its trough. Hedge funds and other money managers purchased the equivalent of 29 million barrels in the six most important petroleum futures and options contracts in the week ending April 14.

Large oil traders vie for Guyana marketing deal despite price plunge Guyana has attracted interest from several oil trading companies for a contract to serve as the marketing agent for the government's share of the country's crude, despite a plunge in global prices, four people familiar with the matter said. Oil major Royal Dutch Shell and commodities traders Gunvor and Mercuria were among the companies that have submitted expressions of interest ahead of the Tuesday morning deadline, the people said on condition of anonymity as they were unauthorized to discuss the matter publicly.

Middle-East Weekly Crude Oil Flows- Oil remains weak; Weekly exports seen at 122.9 million bbl

Middle-East crude oil exports for last week are provisionally assessed at 122.9 million bbl (17.6 million bpd) compared to the revised 155.9 million bbl (22.7 million bpd) for the week prior. Export volumes appeared to be slowing down during the week. To read more, click here.

2 April 21, 2020

MARKETS TODAY

OIL: U.S. oil futures continued to trade in negative territory, after closing down nearly $40 on Monday in their first ever sub-zero dive, as concerns grew the United States will run out of storage for a glut caused by the coronavirus lockdown.

FOREX: The U.S. dollar rose against most major currencies as investors sought a safe haven after a plunge in oil prices a day earlier.

U.S. EVENTS SCHEDULED FOR THE DAY (ET) 1000 Existing home sales for Mar: Expected 5.30 mln; Prior 5.77 mln 1000 Existing home sales percentage change for Mar: Expected -8.1%; Prior 6.5%

(Inside Oil - Americas Edition is compiled by Rupali Shukla in Bengaluru) Refinitiv 3 Times Square, New York, NY 10036 For questions or comments about this report, contact: [email protected] Please visit: Refinitiv for more information. To subscribe to Americas Oil newsletter, click here. Privacy statement