Oil (WTI CL contracts) trade on Globex is heavy indeed - front contract on approach to $11.00
… OK, makes liar out me, under $11 now
The background to weak oil prices is the demand destruction from the lockdown imposesd globally to counter the coronavirus outbreak, storage rapidly filling up and production being cut but not fast enough (see this from earlier on what will happen to output once storage has topped out:
- Goldman Sachs says global oil storage capacity to be reached in 3 weeks, then a 20% cut in production)
Also weighing on the price is (well-founded) speculation that the US Oil Fund will roll its current position in the June 2020 contract to contracts further out.
- USO holds (or has held) around 4% of total open interest in the June contract
ps. Brent crude June settlement contract expires this week, Thursday. Brent contracts are cash settled, not physical delivery like CL.