Negative Futures Crude Prices: Correlation Of Opec-plus Supply And Existing Vlccs-fpsos & Onshore Storage Indifferences
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Date
2022-06-30
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جامعة الوادي - University of Eloued
Abstract
This essay attempts to explain different interactions of crude market agents that have originated negative oil price in 2020, as well as storage capacity conditions in net oil importing countries, OPEC-Plus supply agreement, ETFs traders behavior in crude market and their implications on futures crude contract price. We analyzed Contango conditions of crude market that sent oil prices below zero for futures contract, and modeled both demands on onshore storage capacity and FPSOs and VLCCs. Empirical results show that OPEC-Plus market share targeted shock explained 75% of futures crude contract negative prices rather than COVID-19 demand decline. We underlined that oil stockpiles marginal cost would replace price-cost divergence for futures delivery in oligopolistic and perfect competition. Finally, we emphasized the proposition of OPEC-Plus producers could act as Stackelberg leaders by regulating short run outputs quotas.
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Keywords
Futures price ; oil ETFs ; OPEC-Plus ; COVID-19 ; petroleum storage
Citation
Sadallah, Daoud. Negative Futures Crude Prices: Correlation Of Opec-plus Supply And Existing Vlccs-fpsos & Onshore Storage Indifferences. مجلة رؤى اقتصادية. مج12. العدد01. 30/06/2022 . جامعة الوادي [اكتب تاريخ الاطلاع] متاح على الرابط [انسخ رابط التحميل]