Benchmark Brent's record $10 discount gives oil market reality check - Reuters:
U.S. President Donald Trump’s confidence he can get a deal to limit a global oil glut has driven world crude futures higher.
But he cannot talk up the underlying physical market that shows the full extent of the demand destruction following the coronavirus outbreak.
The Brent crude oil benchmark, used to price more than half the world’s physical crude cargoes, has dropped to a record discount to Brent oil futures of about a $10 per barrel.
Whatever oil producers decide on supply, demand destruction caused by lockdowns to contain the novel coronavirus is so significant the world will soon run out of storage space for millions of barrels of surplus oil.
Estimates of oil demand destruction range between 20 million and 30 million barrels per day (bpd), or roughly a third of global daily oil demand.
Physical dated Brent was priced at $15 a barrel on Wednesday after the Brent futures contract, a financial instrument used to price oil for future delivery, settled at $24.74 a barrel, Refinitiv data showed.
U.S. President Donald Trump’s confidence he can get a deal to limit a global oil glut has driven world crude futures higher.
But he cannot talk up the underlying physical market that shows the full extent of the demand destruction following the coronavirus outbreak.
The Brent crude oil benchmark, used to price more than half the world’s physical crude cargoes, has dropped to a record discount to Brent oil futures of about a $10 per barrel.
Whatever oil producers decide on supply, demand destruction caused by lockdowns to contain the novel coronavirus is so significant the world will soon run out of storage space for millions of barrels of surplus oil.
Estimates of oil demand destruction range between 20 million and 30 million barrels per day (bpd), or roughly a third of global daily oil demand.
Physical dated Brent was priced at $15 a barrel on Wednesday after the Brent futures contract, a financial instrument used to price oil for future delivery, settled at $24.74 a barrel, Refinitiv data showed.
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