Investing.com – The oil market intends to evaluate the producers and consumers of the consequences of current conditions, during the recent weeks with the continued production of a huge surplus, during the month of March the surplus was 14 million barrels per day, the global oil stocks began to fill, and reach its maximum limits.
Extraordinary volatility continues in the coming weeks, according to a note by Goldman Sachs, after prices fell below zero for the first time in history for contracts that expired on Tuesday for the front month of May. While June contracts also fell below the important support level at $ 20 a barrel, with a decline of about 20%, at 16.38 at the time of writing the report. It seems that the American’s pain has just begun, because once the severely damaged May contracts expire, the focus will shift to the June contracts, which may suffer worse suffering if you encounter what May contracts faced yesterday. Estimates Energy Estimate indicates that the US stock will be full by the middle of next May, meaning that there will be no space for any oil to be stored.
“As oil storage space shrinks, production will decline aggressively to offset the market again, and higher prices begin to emerge,” Goldman’s analysts, including Damian Corvalian, say in a note dated April 20. What will face June contracts will be worse.
West Texas Intermediate contracts plunged to 40.32 negative dollars on Monday. Negative prices show that oil drum owners are willing to pay to exit from Tawila centers before the contract expires, to avoid receiving oil next month.
Price moves are pure supply of an unprecedented stock surplus, causing a first-day daily crash, and forcing the industry to collapse because of adherence to the expiration rules of commodity futures contracts.
As for the oil industry, it recorded approximately 51,000 job losses in March, with a 9% reduction, and the worst is yet to come, especially with what happened yesterday.
According to the BMW research agency, job losses lost in March increased by 15,000, including construction, industrial, drilling, shipping and tools workers.
In an interview with Bloomberg, company vice president Philip Jordan said: “We are now looking at a loss in job growth that the economy took 5 to 7 years to create.” “What scares here is that that is only the beginning, and it doesn’t look like April will be kind to the oil and natural gas markets.”
Destructive contracts expire today, with a pandemic in the United States and widespread unemployment. The price of June contracts fell to as much as $ 15 a barrel.
Oil has not received any support from the ++ agreement, as it continues on a downward trajectory of $ 21.30 a barrel. There is no end in sight, as the world continues to pump, everyone offers price cuts for sale, and storage space is implemented.
BWW expects 30% decline in employment in the sector during the first quarter of 2020.
The oil industry had nothing to support, from falling demand to price war and to American intransigence in continuing to pump.
The industry is unable to cut jobs fast enough to cope with the free fall in the market, according to services company Halliburton, whose disappointing earnings report was released yesterday.
Last month, Halliburton laid off 3,500 workers from headquarters in Houston, and in Oklahoma, the company cut 50 workers after losing its job with the giant OG Resources.
Oil services companies are being hit hardest. As drilling companies declare bankruptcy, the pain extends to the entire industry.