Oil, the price of a barrel with delivery in May collapses: for the first time in history it closes in negative at -37.63 dollars per barrel

One week after the agreement between the producing countries to cut production and holding prices, oil prices continue to plummet unimaginable. the West Texas Intermediate (Wti) with delivery in may on Monday it collapsed and for the first time in history it deviated and closed negative. In short: the price has dropped below zero, a -37.63 dollarsthe 305% less than at the beginning of the session. In January it was changed for just under 60 dollars.

However, it should be emphasized that WTI with a very close delivery is under pressure, while contracts with maturity in the coming months suffer more limited losses, indicating that demand is collapsing due to the coronavirus it is waiting to go up in the coming months The real problem is that there is not enough space at this stage storage in which to put excess oil in the coming weeks.

With the blockades imposed in the main economies to contain the coronavirus the demand of oil has collapsed and so far has been worth nothing production outages decided by Opec +. Cuts that, from the beginning, seemed inadequate: 9.7 million reduction vs. expected demand, it will drop approximately three times as much. “No reduction in production can be fast and deep enough dynamic prices, “other analysts point out, noting that beyond the black session, WTI prices and Brent they had already lost more than half their value in 2020 with the coronavirus and the expected recession. But no one would have imagined such a dark Monday for crude oil.

The fall in prices together with the expectation of a recovery in economic activity in the fall has resulted in a market phenomenon called ‘contango’, in which the prices of commodity they are higher for the future than for the present. One of the biggest bets in contango-based history dates back to 1990 when Phibro, a division of Salomon Brothers, had made low-cost oil reserves by parking it in tanks and tankers just before Iraq invade the Kuwait and crude oil prices soared. The architect of the bet.Andy Hall, became famous for receiving $ 100 million for a day of work and buying a castle in Germany.