Markets predict global oil demand will remain low until summer as June futures continue to decline.On the other hand, it has seen steady growth.
Oil futures have recently seen a historic decline as traders struggled to liquidate their May futures contracts. At some point, oil prices fell to double-digit negative numbers for the first time in history. Oil production continues to outstrip demand and no one is certain when demand will recover to pre-Covid-19 levels.
The summer looks particularly bearish.
Oil keeps falling
At the time of writing this article Oil futures for June, they trade under $ 13, according to the CME. July futures are now under $ 20. There is currently no evidence that these prices will recover soon.
However, some still believe that “wealth will be made” once demand returns to pre-coronavirus levels. However, short-term betting is still a serious bet. It could take months for demand to increase again.
If this continues, the depressed demand is likely to affect non-oil sectors, and many have warned that the agricultural sector may be next. Some analysts have even argued that economic reopening could be a “sell the news” event as consumer spending continues to decline. The profitability of companies is likely to be low as the year progresses.
The financial markets are still not shaken
Despite worrying macroeconomic indicators, financial markets remain positive. The S&P 500 rose 1.47% a day yesterday. Bitcoin has also remained strong and is currently trading above $ 7,700.
However, many point out that the financial markets do not appear to be linked to the real economy. Some experienced traders see the current rally similar to 1929, but Wall Street is still not convinced.
The slump in oil prices remains a worrying signal for the time being. Oil is the “lifeblood” of world trade and a sharp indicator that should concern us. Bitcoin and the major financial markets remain strong, but we’ll have to see how they develop over the coming months. If the depressed demand continues throughout the summer, the financial markets should be forced to take economic reality into account.
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