"We're Crippled At $30" - Oil Prices Hold Big Losses After Massive Crude Build

Oil prices cratered today - completely shrugging off the OPEC+ deal as if it never happened - following IMF slashing global growth expectations and the Saudis launching a price war (heavily discounting crude). WTI broke below $20 and Brent below $30, and a key gauge of the oil market’s health is at its weakest in more than a decade as supplies build and futures contracts roll over. West Texas Intermediate crude for May delivery traded at more than $7 a barrel below its June contract on Tuesday, the deepest contango since 2009. The May contract is nearing expiration and exchange-traded funds, including the United States Oil Fund, have been selling front-month contracts and buying second-month futures.

Source: Bloomberg

Simply put, this is an indication of extreme oversupply.

“At least over the next month or so, before these cuts have an opportunity to kick in, we are going to be very stressed on inventories,” Bart Melek, head of commodity strategy at TD Securities, said by telephone.

And so all eyes are once again on the inventories for any positive signs...

API

  • Crude +13.143mm (+10.1mm exp)

  • Cushing +5.361mm

  • Gasoline +2.226mm (+7.1mm exp)

  • Distillates +5.64mm (+1.8mm exp)

This is the 12th weekly build in crude stocks and follows two weeks of massive build in all oil products.

Source: Bloomberg

WTI was trading just above the $20.75 level ahead of the API data and was unchanged on the big build

“There is some general concern about oversupply and maybe the cut isn’t going to be big enough,” Phil Flynn, senior market analyst at Price Futures Group Inc., said. “The cut doesn’t do you a lot of good until the end of the month.”

The world is choking on too much crude and will run out of places to store it within a month, according to trading giant Gunvor Group, and Pioneer's Scott Sheffield warned "we're crippled at $30" and said that Cushing storage will be full in 4-5 weeks.