Saudi Arabia a major oil producer had recently reduced its official selling price on its Asian crude grades to China on the macro that the world’s second-largest economy has no place to store additional oil supplies, triggering the crude oil bears to breach below the $40 support price level in the case of Brent crude.
Just recently, Trafigura ordered 12 massive oil tankers with a holding capacity of about 24 million barrels of oil, in order to have space in storing crude, on the macro that global gasoline demand is falling and the COVID-19 onslaught still remain on the major headline, thereby putting more selling pressure on the black hydrocarbon derivative, other major oil dealers which include Lukoil, Vitol, Royal Dutch Shell Plc. have also chartered 18 large tankers for storage.
The bulls roar seems to be called off, on Organization of the Petroleum Exporting Countries’ latest monthly report, revealing that global oil demand will plunge by 9.06 million barrels per day in 2020 instead of the 8.95 million barrels per day plunge anticipated a month ago.
While many oil traders wonder if, we are in an era of peak demand for fossils, the rise of renewables is finding it easier to raise money than fossil fuels based firms, showing the lackluster altitude on fossils in recent times among investors.
Compounding the oil bulls woes is the growing concern that gasoline demand could deteriorate into the slower driving winter month, as the northern hemisphere moves under the roof.
Oil traders are of the bias that the recent price correction in the crude oil market has been long overdue, given a slowing gasoline demand recovery, and rising supply in the short term.