Oil price plunged 300% in USA led some industris bankrupt

On Monday, the market set a new record. This is: WTI prices for light crude oil futures in West Texas in May not only hit a record low, but also fell to a negative value. It fell more than 300% at the close, closing at -37.63 USD per barrel. It can be said that everyone, including the traders on Wall Street, exclaimed, this is unprecedented market trend. Why is there a plunge on Monday?

At present, the market is very pessimistic about the price of crude oil in May, but thinks that June will rebound, so we see the price of WTI in May plummet, but the price of WTI in June is still trading around $ 20 per barrel. This has forced traders to a dead end: if you do not move positions, you must find somewhere to store 1,000 barrels of crude oil per lot. Not to mention that now global storage space is reaching its limit, even if local storage can be found, the cost will be very high. If you move to a June futures, the June futures price is now above $ 20, and the May futures price is at a negative value, so that the loss caused by the historically high spread makes no one will move.

So what to do, with only one day left on the delivery date, it seems that there is only one way left for Wall Street: sell! No matter what the price, you have to close the position. Therefore, this is why, after midday in the US stock market, we saw the rapid cliff-fall of WTI oil prices plunge and continuously set a new record low.

In fact, what may be even more panic in the market is the massive bankruptcy of SMEs in the oil industry. A company executive in the Texas oil fracturing equipment business in Texas on Monday afternoon revealed that last year, the company's annual revenue was 40 million US dollars, and now it can reach 500,000 US dollars a month. Now the company can only rely on government subsidies to survive, and the number of customer layoffs is as high as 60%. For these small and medium-sized enterprises, whether it is US $ 5, US $ 1, or negative oil prices is meaningless, because the three words of "live" are no longer dependent on the market. The operator said that he now only hopes that his clients do not close down, otherwise the contract money will not be collected. With oil prices plummeting, the crises faced by large companies are far less than those of small and medium-sized oil companies that have been unable to make loans. If more and more small and medium-sized enterprises are bankrupt, the energy industry will see a domino effect in the market.

The current price volatility is limited to the May WTI futures price. After the contract expires on Tuesday, the international crude oil futures price will be updated to the June futures price, and then it will return to around $ 20 per barrel. In any case, this Monday's oil price trend will become an important mark in financial history.

The reference price for Chinese companies to purchase crude oil in the world is basically the price of Brent oil. This price fluctuation will directly affect our crude oil import costs. At present, all major oil-producing countries will make substantial discounts on crude oil export prices. According to public sources, the spot price difference between Russian crude oil and Dubai crude oil is $ 8 per barrel; Australian crude oil even has a discount of $ 13-14 to Brent futures prices.