Crude Oil Price Rout Endures, Futures Crash 25% Ahead of GDP
OIL FORECAST – CRUDE OIL PRICE SPIKES LOWER AHEAD OF GLOBAL GDP DATA DUE; DEMAND WOES & CORONAVIRUS RECESSION RISK LINGER
- Crude oil prices are sinking after the commodity rebounded out of negative territory last week
- June 2020 crude oil futures price is down nearly 30% near $12.00 per barrel as demand woes
- Oil price action might experience more downward pressure if global GDP data due for release exacerbates bearish market sentiment
Crude oil prices are retreating to start the trading week. The commodity is down almost 30% on Monday judging by June 2020 crude oil futures, which now trade slightly above $12.00 per barrel. Weakness in oil price action is owed primarily to the persistence of crude oil demand woes with the global economy still paralyzed amid the coronavirus pandemic and great lockdown.
CRUDE OIL PRICE CHART: 1-HOUR TIME FRAME (21 APRIL TO 27 APRIL 2020)
Crude oil has now retraced about half of its rebound notched after the commodity collapsed to -$37 per barrel last week. Despite an OPEC+ deal slashing approximately 10 million barrels of production per day, the move lower in crude oil prices also comes in response to filled storage capacity as the supply glut deepens.
NEGATIVE OIL PRICES MIGHT MEAN TROUBLE FOR MARKETS AS GLOBAL GDP DATA LOOMS
That said, there is a risk that massive supply-demand imbalances will endure. This might cause the crude oil market to crack again and catalyze the unthinkable: a commodity worth less than nothing. Perhaps the return of negative crude oil prices could follow upcoming GDP data readings from the United States and Eurozone later this week.
The US GDP and Euro-Area GDP reports are due Wednesday, April 29 at 12:30 GMT and Thursday, April 30 at 9:00 GMT, respectively. First quarter GDP data is expected to be quite gloomy in light of to economic fallout from the coronavirus according to IMF World Economic Outlook for 2020. If the high-impact economic indicators cross the wires with worse-than-expected readings, it may prompt another wave of risk-aversion that steers the price of crude oil lower, which is a notable possibility considering a global recession is likely unavoidable.
Connect with @RichDvorakFX on Twitter for real-time market insight
DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.