Oil giveaway brings out the bears

By Samuel Shen and Tom Westbrook

SHANGHAI/SINGAPORE (Reuters) - The crash at U.S. vulgar prices has turned a reliable wealth less than worthless and given fresh urgency ought bearish voices, who state it sounds horror bells because global growth and are bracing because a catastrophic collapse at asset prices.

Markets are already unnerved at the spectre of traders paying ought give away can futures contracts because West Texas Intermediate crude, because storage tanks at the delivery point at Oklahoma quickly fill with unused fuel.

But some just participants study the transformation of "black gold" into a liability is more than a bet gone wrong, and quite heralds a new about of deflation and economical destruction because the COVID-19 pandemic wrecks the earth economy.

"This is isolate of the deflation process," said Murray Gunn, head of global investigation at just forecasting corporation Elliott ripple International.

"At this juncture, our analysis suggests that this is identical perhaps the second ripple of a much bigger fall...over the next two or three years we will exist at a deflationary environment. Survival will exist paramount. And money is king."

The crash has already knocked the wind from a rebound assembly that has taken the MSCI earth Index up more than 20% from March lows, sending Asian shares at their steepest tumble at a month and U.S. stocks sliding two days at a row.

Those preparing because worse ought depart shout on a slew of more basic problems ranging from grease speculators going bust ought the destruction of the U.S. shale industry and a faith crunch if energy firms' bad debts depart and banks tighten their belts.

"What we're seeing here is this fast-forward recession," said Patrick Perret-Green, head of investigation at AdMacro, a boutique investigation and investment advisory at London.

Trading losses can quickly disperse risks outer ought banks, who are apt ought reply by lending less, he said.

"Then the riddle is do they then initiate re-evaluating other things? So, sum commodities trading, copper, the sum shebang...we're reading the basic collapse because something no impartial because grease besides because everything."

Graphic: U.S. grease plunges, amplifies economic concerns https://fingfx.thomsonreuters.com/gfx/mkt/oakpeknyprd/Pasted%20image%201587473526227.png

OIL below WATER

The fare crash too reflects the finish full shortage of energy ask - once regarded because constant.

While that has some hoping inexpensive fuel could subsidise a rapid retort ought global growth, it too manner comfort could exist distant really because exporters and economies reliant at them.

"For front-end prices ought recover...we first shortage storage ought normalise which will ask ask at supply," said Diego parrilla, who manages Quadriga Igneo, a $325 million fund designed ought favour at turmoil, which is up about 50% this year.

"That will ask giant cuts and/or ask growth, both unlikely at the finish term," he said, predicting large losses because grease bets and flat the possibility of greater global pressure amid the grease producing United States and importer China.

To exist sure, no everyone is forecasting gloom, with OCBC economist Howie Lee calling the crash "not the goal of the world" and no reflective of the sum market, because global benchmark Brent prices hold at least no dived therefore far.

And the U.S. Federal retain has thrown therefore much money at faith markets that contagion seems unlikely.

But the effects at the industry globally, and especially U.S shale producers who depend at U.S. vulgar futures at the imply $40s per barrel ought crush even, are deleterious and could ponder at growth if their repeatedly enormous capex spending vanishes.

"At these prices, the sum industry is underwater," said David Winans, a faith analyst at global money manager PGIM.

"The 'supply shock' from the OPEC+ collapse at March was really a mirage, the ask shock from COVID-19 is overwhelming everything."

($1 = 0.9241 euros)

(Reporting by Samuel Shen at Shanghai, Tom Westbrook and Vidya Ranganathan at Singapore and Saikat Chaterjee at London; Editing by Marguerita Choy)