On April 20, the contract for WTI, the benchmark for US oil rates, fell below the $0-a-barrel level
Angel Broking has temporarily suspended trading in crude oil futures to protect its clients from ongoing volatility. It comes after WTI crude contracts on Monday fell below zero for the first time ever over concerns of lack of storage facilities at a time when demand outlook is bearish. “Our customer receivables on crude are less than Rs 13.5 crores, spread across 145 clients for the April Expiry. We have temporarily suspended trading in crude, given the unprecedented volatility, to safeguard our customers.Except crude, trading in equities and all other commodities continue,” said sources from Angel Broking.
“The trading in crude oil futures has been suspended in order to ensure the interests of the customers are protected and they could be safeguarded from the on-going volatility. Once the situation normalises, we shall resume normal activities,” the source added.On April 20, the contract for WTI, the benchmark for US oil rates, fell below the $0-a-barrel level. The May crude futures ended at minus $37.63 a barrel, a 306 per cent daily fall. The crude oil contracts on Multi Commodity Exchange (MCX) reflect prices on the New York Mercantile Exchange (NYMEX).
Meanwhile, the US Energy Administration announced recently that the oil storage facility at Cushing, Oklahoma, was about 72 per cent full as of April 10, Reuters reported. Bob Yawger, director of futures at Mizuho in New York, told the global news agency that the commodity’s current price is effectively worthless if there is no available storage anymore.However, fall in WTI crude is not expected to affect India much. India’s entire crude basket represents oil from Oman, Dubai and Brent crude, not WTI. The prices that hit negative are of WTI which is mostly relevant for the US, Canada and Mexican markets. Brent crude, which is what India purchases is still not as cheap as the WTI.
Source: Business Today
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