Coronavirus in Oklahoma: Continental Resources’ Harold Hamm applauds CFTC advisory that warns oil market players to behave
Continental Resources’ executive chairman is applauding a regulatory advisory issued this week encouraging players in the nation’s markets for oil commodities and others to enact risk controls and to take other measures deemed necessary to keep values positive.
In April, crude contracts involving May deliveries settled at prices that went as low as -$40 a barrel. Crude contracts set for a June delivery settle on May 19.
The advisory was issued by the Clearing and Risk, Market Oversight and Swap Dealer and Intermediary Oversight divisions of the U.S. Commodity Futures Trading Commission.
It advises markets, merchants and clearing organizations to take steps to prevent negative prices from happening for the second time in as many months.
After the April event, Continental Resources Executive Chairman Harold Hamm eviscerated players for making last minute changes to the market's values system that made negative pricing possible.
On Thursday, Hamm said he was gratified to see the commission respond to his concerns, shared by the Domestic Energy Producers Alliance.
“This ... puts all future exchanges in check, emphasizing their legal responsibility for preventing ‘manipulation, price distortion and disruptions of the delivery or cash-settlement process,’” Hamm said.
Further investigations are needed, he added.
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“(The advisory) is a step in the right direction in getting clarity and certainty for the markets in the future,” Hamm said.
While it is too soon to say it is a trend, the American Petroleum Institute’s April 2020 monthly statistical report (MSR) and a spot check of markets on May 1 show demand for refined petroleum products is on the mend.
The report, also issued Thursday, showed that gasoline deliveries in April had fallen to the lowest level seen since 1972.
On a weekly basis, total U.S. petroleum demand rebounded since then by 1.6 million barrels daily as of May 1, institute officials said.
As demand slowly recovers, so does the price refiners are getting for those products.
According to AAA, the average price for a gallon of gas in Oklahoma on Thursday was $1.51. A month earlier, it was just $1.40.
Global pricing for oil contracts that settle next week also has been gradually improving.
Crude oil with a June delivery was trading higher Thursday, up more than $2 a barrel at $27.43 about a half hour before U.S. markets closed.
"April was widely expected to reflect the weakest oil market data yet and may be a low point that is reflected on for decades to come,” said Dean Foreman, the institute’s chief economist.
“Significant uncertainty remains over the state of oil markets in the weeks ahead, but the realignment of the supply and demand balance coupled with the gradual reopening of state economies leads us to be cautiously optimistic that the worst may be behind us," Foreman said.