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At the close of a nightmare meeting, the price of US crude for May delivery fell for the first time in history to below $ 0 / barrel, as investors and speculators are willing to pay to get rid of oil in the absence of Storage capacity.
The contract, which expires at the end of Tuesday’s session, means that people with oil must find buyers as soon as possible.
But with stocks so high in the United States in recent weeks, they are forced to pay to find buyers: the price of a barrel of US crude oil (WTI) has closed at -37.63 dollars.
Unprecedented meeting, price drop 306%
Oil market traders held an unprecedented meeting on Monday, April 20, who saw the future of crude literally collapse and even trade for the first time in history at a negative level, amid panic created by global demand without unprecedented demand. quarantine due to the crown pandemic.
More specifically, the West Texas Intermediate May contract fell sharply at $ 55.90 or 306%, closing at -37.63 per barrel, which practically means that merchants are asking to be paid to proceed with transactions, given that El The market is flooded with oil, due to the previous price war between Saudi Arabia and Russia, at a time when demand is non-existent.
Of course, as analysts point out, today’s fall does not reflect the real image of the affected market, since the prices of the May contract have been released from the June contract, which is the most active, which although it fell significantly, the barrel continues to trade above $ 20.
It is observed that the June delivery contract fell by $ 4.60 or 189.3% and closed at $ 20.03 per barrel.
In any case, today’s image of the May contract is unprecedented, at the same time that it marks the biggest daily drop due to the slow and, of course, new all-time low.
It is recalled that the previous record low oil price was recorded on March 31, 1983, when the barrel closed at $ 10.42, according to Dow Jones.
Today’s dive also raises serious concerns about upcoming developments in the collapse of the US oil industry. But also for the oil market in general, as despite the recent agreement to courageously reduce production under the OPEC + scheme, the market remains strong. that the pandemic has led to a general cessation of economic activity and the oversupply of the previous period when it will be absorbed is unknown.
In other words, the cuts announced by OPEC +, on the order of 10 million barrels per day, did not convince investors that they are enough to stabilize the market and balance the fall in demand amid the economic collapse due to the pandemic.
However, unlike WTI, Brent, which is also an international benchmark, presented a more balanced picture today, without, of course, escaping the recession. The June contract also fell sharply, at $ 2.51 per barrel or 8.94% to $ 25.57 per barrel.
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