The picture for oil investors remains bleak with the June WTI contract falling to $10 with attention already switching to the expiry of this contract with the painful memory of sharply negative prices when the May contract expired still fresh in the mind. Traders’ unwillingness to be caught with any barrels when the June contract expires also explains the strong contango with the June expiry trading at close to $10 on CME while the prices for July and October are 70% and 140% higher, respectively. Moreover, investors are expecting demand to slowly recover in the third quarter of 2020, helping US tanks to avoid another “no vacancies” situation.
The trend is clearly bearish for Brent too, but the scenario seems much more under control, with price just below $20. The possibility of transporting it and the specific characteristics of the underlying contract are making Brent much more resilient in the current storm.
