Energy markets early this week remained under pressure.
We take a look at what happened and what is yet to come.
Macroeconomic factors weigh heavily on markets, shares Greg McBride, commodities broker with Allendale, Inc. Crude oil, for instance, reached new lows in front month contracts.
?The May contract that went negative Monday goes off the board today, so that?s putting pressure on all our markets. At around 3 a.m., markets started to dip, and that coincides with the dip in the Asian markets. They were under pressure as well. It?s a macro issue right now,” McBride said.
Crude oil prices fell below zero, as supply overwhelmingly exceeds demand. McBride says, ?We don?t have room at the inn anymore.?
?There?s no place to put it,? McBride said. ?They can?t allow people to take delivery because when you take delivery, you are either putting it in a government warehouse or specialized warehouse. There?s nowhere for it to go. If you want to take delivery on oil, you have to pay someone to take it. At that point, there?s no liquidity in it. You can?t make money on oil right now.?
Oil stocks rise, despite production cuts. McBride points to reduced demand for gas and diesel fuel, due to citizens practicing social distancing and travelling far less than normal.
The lack of demand greatly impacts “crude oil-sensitive markets,” such as soybean oil, ethanol, soybeans and corn. McBride offers his prediction for crude and commodity prices moving forward.
“You could see this thing sell off for another day or two, but look towards the end of the week to see maybe a bit of a technical correction to get us back up,” McBride said. “It’s not going to get fixed right away. We need to see demand for fossil fuels come back into the market before we can get excited about seeing the markets completely rebound.”
