Oil Prices Extend Losses on Storage Concerns

Oil Prices Extend Losses on Storage Concerns


Oil prices extended rally lower on concerns over limited storage capacity. The coronavirus impact on the daily economic activity wiped out almost 30% of the global oil demand. Even though oil producers are reducing production, yet they failed to support prices and stabilize the market until now. On the other hand, investors are worried that excess supply will lead to an oil glut, and continue to fill oil storage rapidly, which would force traders to pay to take oil off their hands, similar to what happened with WTI May delivery. During the Asian session, the West Texas Intermediate crude June delivery fell to $10.13, and Brent blend June delivery tumbled to $18.72.


Major US stock index futures held prior gains awaiting fresh drivers. Investors are weighing the prospects of reopening the economy, but also their risk appetite is hit by falling oil prices, which is adding losses to the oil and gas sector. The Dow Jones Industrial Average future held steady above 24000, the S&P500 futures rose to 2879, and Nasdaq futures rallied to 8863.


The dollar index, which measures the greenback against a basket of major currencies, settled lower for the second consecutive day, closing at 100.05 as investors favored riskier assets. The growing possibilities of reopening the economy spurred investors' appetite towards risk. However, market participants will also focus on the outcome of the Federal Reserve monetary policy meeting, and other major economic indicators, among them the preliminary reading of the first-quarter GDP. The EURUSD inched higher to $1.0840, the GBPUSD ascended to $1.2471, and the AUDUSD advanced to a seven-week high of $0.6489.


Gold prices moved lower as investors drifted away from safety. The price of a gold ounce fell to $1691, the price of a silver ounce dropped to $14.91, and palladium futures declined to $1888.

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