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Oil producers were paying buyers to take barrels because storage facilities were full, with the market's lowest point on Monday implying a payment of about $40 per barrel. Buyers would face transport and storage costs and would need to bet on higher prices later to profit, so many producers are expected to shut wells until the market recovers.
Storage saturation removes the option to hold surplus crude, forcing production shut-ins that tighten supply. The price signal here is bearish near-term crude but points toward eventual supply cuts.
theguardian.comJillian AmbroseApr 20, 2020Not enough comparable past events yet for a historical read.
Not enough comparable past events yet for a historical read.
Moves of each commodity's benchmark from the last close before the event. Historical reads pool past events of the same kind; they describe what happened, not what will. Not investment advice.
Explains the storage-full mechanism behind producers paying buyers to take barrels, contributing to the bearish sentiment around the contract rolls.
