Big D Equipment Co issued the following announcement on May 8
Oil fell as investors weighed stockpile declines against a darker outlook for demand and economic recovery.
Futures in New York dropped 1.9% on Wednesday after the Energy Information Administration reported the lowest crude input by U.S. refineries since 2008 suggesting that demand recovery will take more time. Meanwhile, Federal Reserve Chair Jerome Powell presented a foreboding forecast for a U.S. economic rebound, saying the country faces unprecedented risks and may take some time to gain momentum.
The drop came despite the EIA’s report that crude inventories fell by 745,000 barrels in the first decline since January.
“The economic narrative is not a solid one or an improving one over the next couple of months, or the next few months,” said Rob Haworth, senior investment strategist at U.S. Bank Wealth Management in Seattle. “There is probably a little more concern in the market that, yes, trends are heading in the right direction, but it may not be enough to overcome the lack of demand.”
The extent of crude’s rebound has been mixed. Saudi Arabia and Russia said in a joint statement they see signs of a recovery in demand. However, OPEC cut its demand forecast for crude in the second quarter by about 15%, in a report published on Wednesday.
In Europe, Germany aims to fully reopen its borders by the middle of June, but China is sealing off cities in a province that borders North Korea amid a growing cluster of cases.
While a fresh wave of virus cases would threaten a fragile recovery, there are some bright spots emerging in the physical oil market. Chinese refiners have bought Brazil’s Lula crude at a premium to the global Brent benchmark versus a discount of about $6 a barrel a few weeks ago, while Russia’s Urals crude hit a nine-month high on Tuesday.
Prices:
- West Texas Intermediate for June delivery lost 49 cents to settle at $25.29 a barrel in New York
- Brent for July settlement fell 79 cents to $29.19 a barrel
The EIA also reported that supplies at key U.S. storage hub in Cushing, Oklahoma, fell by 3 million barrels last week. Additionally, the discount on crude for June delivery relative to July, a structure known as contango, is at its tightest since March, suggesting that concerns around brimming storage capacity are easing.
Other oil-market news:
- It’s still a little early to get a perfect picture of how Covid-19 has disrupted supply and demand in the global oil market, but one closely watched measure is pointing to deep output cuts by the world’s producers.
- Royal Dutch Shell Plc said it will be well placed to boost shareholder payouts once the oil market recovers, as it sought to appease investors after last month’s surprise dividend cut.
- A historic crash in oil prices and fallout from the coronavirus pandemic will accelerate asset sales in the Middle East and open up a gap for sovereign wealth funds to make “opportunistic investments,” according to HSBC Holdings Plc.
Original source can be found here.
Source: Big D Equipment Co