Oil Continues Decline Amid Intensifying OPEC Market Share Battle - Bloomberg:
Oil’s rebound from its biggest crash in a generation halted after Saudi Arabia said it would boost its production capacity, and the United Arab Emirates said it would raise output.
Futures fell as much as 4.3% in New York. The battle for market share intensified as Saudi Aramco announced plans to boost its oil production capacity to 13 million barrels a day and Abu Dhabi National Oil Co. vowed to pump as much as possible next month. Meanwhile, a government report showed U.S. crude stockpiles rose 7.66 million barrels last week, the biggest build since November.
The oil market’s bearishness was reflected in the nearest timespread for the global Brent benchmark which sank deeper into a contango structure, signaling oversupply. The marker is at its weakest since 2016, creating incentive for traders to book tankers to store oil they can sell later at a profit. It’s also a sign that, at low prices and despite the coronavirus, there can still be plenty of demand for oil from those countries ramping up output.
“OPEC out for market share is tipping the market in negative territory,” said Bob Yawger, director of the futures division at Mizuho Securities USA. “There was an expectation that the Trump Administration would provide stimulus and that failed to materialize.”
Oil’s rebound from its biggest crash in a generation halted after Saudi Arabia said it would boost its production capacity, and the United Arab Emirates said it would raise output.
Futures fell as much as 4.3% in New York. The battle for market share intensified as Saudi Aramco announced plans to boost its oil production capacity to 13 million barrels a day and Abu Dhabi National Oil Co. vowed to pump as much as possible next month. Meanwhile, a government report showed U.S. crude stockpiles rose 7.66 million barrels last week, the biggest build since November.
The oil market’s bearishness was reflected in the nearest timespread for the global Brent benchmark which sank deeper into a contango structure, signaling oversupply. The marker is at its weakest since 2016, creating incentive for traders to book tankers to store oil they can sell later at a profit. It’s also a sign that, at low prices and despite the coronavirus, there can still be plenty of demand for oil from those countries ramping up output.
“OPEC out for market share is tipping the market in negative territory,” said Bob Yawger, director of the futures division at Mizuho Securities USA. “There was an expectation that the Trump Administration would provide stimulus and that failed to materialize.”
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