- Vitol sees demand down as much as 20 million barrels a day
- WTI futures fluctuate after rallying as much as 5.1% earlier
The U.S. oil market is displaying worries that stockpiles are going to run out of storage space, with futures being whipsawed as a growing glut counters economic stimulus measures.
The so-called WTI cash roll traded down at the lowest level since December 2008 on expectations that inventories at the delivery point for U.S. futures would balloon in coming weeks and months. Gauges of the physical market for actual barrels of crude are also pointing to weakness.
As the coronavirus pandemic locks down swathes of the world, concern over the hit to consumption is mounting. The head of Vitol Group warned demand is decreasing and will shrink further as India enters a lockdown. U.S. futures fluctuated, paring an earlier jump of as much as 5.1% after lawmakers struck a deal to provide $2 trillion of spending and tax breaks.
“Investors are still grappling with the magnitude of decreased demand,” said Nick Holmes, portfolio manager at Tortoise. “Combine that with more supply hitting the market, it creates severe dislocations across oil markets. There’s a lot of uncertainty about how long demand will be depressed and at what levels.”