“Yesterday Was Scary, Today Is A Lot More Scary”: Black Gold Bloodbath As ‘Paper’ Oil Plunges Everywhere

by Tyler Durden
ZeroHedge.com
Tue, 04/21/2020

Forget Turnaround Tuesday. Oil is a “dangerous market to trade in right now,” said Pierre Andurand, founder of Andurand Capital Management LLP, in a Bloomberg TV interview. The market needs shutins to happen now, he said.

“This has changed everything,” said Monica Malik, chief economist at Abu Dhabi Commercial Bank.

“So much of the recent recovery was based on the fact that the oil price had been above $50-$60, providing support to economic activity, and that’s just been decimated.”

This “price slump was psychologically very important,” said Eugen Weinberg, Commerzbank AG’s head of commodity research.

“There is a possibility it will change perceptions forever.”

The best summary of today’s chaos came from Bloomberg energy reporter Javier Blas who put it simply: “Yesterday was scary. Today is a lot more scary. The whole oil market is screaming oversupply simultaneously. June WTI, which four weeks away from expiry, just touched $6.5 a barrel. The market is going to force huge production cuts not in May or June, but immediately.”

Yesterday was scary. Today is a lot more scary. The whole oil market is screaming oversupply simultaneously. June WTI, which four weeks away from expiry, just touched $6.5 a barrel. The market is going to force huge production cuts not in May or June, but immediately | #OOTT

— Javier Blas (@JavierBlas) April 21, 2020

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Update (1345ET): Here we go again. June WTI is now crashing – trading below $7 – down over 65% on the day…

And July is crashing, down over 30%, below $18…

Remember the settle occurs at 1430ET (and the expiry of the May contract)… and the prompt spread (May-June) has surged back to zero…

USO is also testing pre-market lows as retail and the roll panic out…

“A lot of retailer investors are looking at it and realizing that they are losing money hand over fist,” Tariq Zahir, commodity fund manager at New York-based Tyche Capital Advisors LLC said.

“It’s undeniable that the USO is having a having a very big effect on the June contract and it wouldn’t be surprising if we go substantially lower.”

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This entry was posted on Tuesday, April 21st, 2020 at 2:32 pm and is filed under Economics, Oil. You can follow any responses to this entry through the RSS 2.0 feed.