U.S. oil prices are on track for their worst day ever. Here’s why.
The May contract of U.S. West Texas Intermediate futures fell to $10.87 a barrel on Monday, down 40%. It means the price grade is on pace to register its worst day back to contract inception in 1983.
To be sure, the May contract expires on Tuesday, thus leaving it exposed to weaker trading volumes and more extreme market moves. The June contract of WTI, which is more actively traded, fell more than 9% to $22.70 per barrel.crude stood at $26.53 on Monday, around 5.5% lower for the session. A contango market implies oil traders believe crude prices will rally in the future, encouraging them to store oil now and to sell at a later date.
The U.S. investment bank said it expected waterborne crudes like Brent to be far more insulated from the coronavirus shock, with prices likely to remain near cash costs of $20 a barrel — albeit with temporary spikes below. "The U.S. situation is quite dire," Daniel Hynes, senior commodity strategist at ANZ, told CNBC's "Squawk Box" on Monday.
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