Crude Oil Price Rout Endures, Futures Crash 25% Ahead Of GDP
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)
Chart created by @RichDvorakFX with TradingView
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
Chart created by @RichDvorakFX with TradingView
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.
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