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Photo: Bloomberg |
US crude oil prices plummeted more than 100% on Monday and turned negative for the first time in history as traders continue to worry about falling demand due to the coronavirus pandemic. The price of the nearest futures contract, which expires on Tuesday, was the most affected, separating from futures contracts a month later by almost 100%.
On an unprecedented day in Turov, the May delivery price removed all value, breaking all lows for oil prices since 1946. The Nymex exchange, which is trading on WTI futures, said it would allow trading at zero. Extreme movement has shown how high oversupply has become in the US oil market. USA Since the breakdown of industrial and economic activity as governments around the world continue to take restrictive measures due to the rapid spread of the coronavirus. An unprecedented deal to cut output by OPEC and allied countries a week ago is proving too weak and too late to offset a one-third drop in global demand.
US crude oil futures (WTI) with May delivery fell more than 300% to minus $ 37.63 a barrel. In other words, buyers will receive money for every barrel they purchase.
Meanwhile, the international benchmark, Brent crude oil, which already changed to futures in June, is trading down 8.8% at $ 25.60 a barrel.
Analyst note however Today’s dramatic historical collapse is greatly overstated due to tomorrow’s futures futures contract (April 21).
In view of this upcoming expiration, these futures are hardly trading on the oil markets at the expense of WTI futures which are more actively trading in June, today more than 15% but up to the level of $ 21.10 per barrel, or as much as $ 20 above the historical bottom of $ 1 per barrel for May.
One of the main causes of the current shocking depreciation of WTI is the increasing volume of oil stored in US warehouses. USA, especially Cushing, Oklahoma, as oil refineries in the US USA They stop operating amid weak demand for their end products. It is feared that once the oil deposits are full, producers will automatically reduce their yields.
Tanks in Cushing, Oklahoma, the central distribution center for the North American oil market, already contain 55 million barrels of crude, or 8.7 billion liters, according to Bloomberg. In the last three weeks alone, 16 million barrels have entered oil deposits due to low fuel demand in the United States.
At the same time, floating tank oil storage facilities are estimated at a record 160 million barrels, but they may also be replenished soon in light of the dramatically decreasing consumption resulting from the global recession caused by the coronavirus pandemic.
Today’s events are a major blow to the President of the United States, Donald Trump, who has done everything possible to protect the country’s oil sector from the price war between Russia and Saudi Arabia. He promised enormous financial support to the indebted sector, but today he showed that his actions were delayed.
The shale sector has made the United States the world’s largest oil producer in the past decade and has pressured foreign policy on American presidents. Trump calls it “American energy dominance.” But this domain is currently going through a great test.
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