Editorial

Perfect storm sees May WTI settle in negative territory

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Speaking after May WTI futures settled at -$37.63 on April 20, Ann-Louise Hittle, vice president, Macro Oils, said: “WTI May expires tomorrow (April 21) and with adequate storage in Cushing unavailable to those who need it, selling intensified in the May futures contract.

“This issue is most intense for May WTI because oil demand is at its weakest, with full coronavirus containment measures in place across much of the US.

For May WTI, the problem is compounded because the contract is settled by physical delivery at Cushing. Storage at the Oklahoma facility is expected to be full within weeks. Brent is not constrained by this requirement for physical delivery.

“On top of this, oil supply has not yet been affected enough by either production shut-ins for economic reasons or by the OPEC+ production cuts.

“With signs of a possible easing in containment measures against Covid-19, the next month’s WTI expiry might not see such an intense selling pressure.”

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Ann-Louise Hittle, Vice President, Oils Research

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