Oil prices are still plunging on supply concerns.
Last checked, oil was down 10% to $11.49. All as global storage capacity plummets, and as COVID-19 keeps demand at extreme lows.
“Our industry has been hit by supply and demand shocks on a scale never seen before,” BP CEO Bernard Looney said in a statement after the oil major reported a 66% plunge in first quarter profit to $800 million compared to a year prior, as reported by CNN.
Worse, oil prices could drop to -$100 a barrel, says Mizuho analyst Paul Sankey.
“Will we hit -$100/bbl next month? Quite possibly,” Sankey says, as quoted by Markets Insider. “We have clearly gone to full scale day-to-day market management crisis, and as we said when we first called for negative prices, the physical reality of oil is that it is difficult to handle, volatile, potentially polluting, and actually useless without a refinery.”
However, this should come as no surprise.
Until we see a substantial draw of supply, and we see a return of demand, oil could easily fall even deeper into negative territory. There are no solid arguments for oil right now.
Too Much Oil Supply and No Demand
There’s too much supply. In fact, the Energy Information Administration (EIA) just announced another crude build of 15 million barrels for the week ending April 17. That comes after a prior week build of 19.2 million barrels. The American Petroleum Institute on Tuesday reported a climb of 13.2 million barrels, says MarketWatch. “Gasoline supply rose 1 million barrels and distillate stockpiles added 7.9 million barrels, the EIA said.”
Worse, there’s so much supply, it’s now being stored in tankers at sea. In fact, according to Reuters, nearly 160 million barrels of crude is now being stored on ships.