Update: The May contract for U.S. West Texas intermediate crude oil (CL=F), which expires on Tuesday, erased all value and dropped below zero for the first time in history.
For decades, oil bears have made grand claims about oil prices crashing to $1. It was never really a claim that industry professionals would take seriously, with most observers viewing it either as fear-mongering or hyperbole.
On Monday the 20th of April 2020, WTI front-month contracts fell to the $1 handle. When you take into account both inflation and global breakeven prices – this truly is a historic day for oil. While some producers around the world – Saudi Arabia most notably – may claim to be able to produce oil at this price, the true breakeven price for every IOC and NOC globally is significantly above $1 and generally accepted to be $50+.
Some analysts have been calling for sub-$10 prices since the OPEC+ meeting was first announced. The fundamentals, they argued, were outside of the control of any oil cartel. Now, with no end in sight for the near-global quarantine caused by COVID-19 and oil storage nearing capacity, demand has all but dried up.
West Virginians Gather to Honor National Guard Slain By Afghan Refugee
Chicago Police Department Hit with Civil Rights Complaint for Race-Based Hiring Practices Meant to Address ‘Systemic Inequities’
James Patterson claims Marilyn Monroe was murdered in explosive new book theory
Florida’s Lawsuit Against Planned Parenthood Just the Beginning
Texas girl rescued after sand hole she was digging collapses, burying her
Unbelievable – She Might Actually Win a District Dominated By Trump: Democrat Aftyn Behn’s Most Unhinged Moments
Afghan Suspect Faces First-Degree Murder Charge in National Guard Shooting
WSJ Editorial Board Rushes to Defend Afghan Refugees After Deadly National Guard Attack
Watchdog group hits Letitia James with bar complaint after federal judge tosses case
Inside NORAD’s holiday command: How the same team that tracks Santa guards North America
Former Ukrainian ‘co-president’ Yermak says he’s ‘going to the front’ after shock resignation
National Guardsman shot in DC is ‘hanging on,’ family pleading for prayer, congressman says
Meta Tolerated Sex Traffickers With 17-Strike System, Lawsuit Claims
Criminal networks exploit US interstates to make human trafficking victims vanish: ‘Real plague’
This Is Why You Can’t Trust Public Schools: Teachers Union Teaches ‘Interrupting Whiteness’
Meanwhile, some oil blends in Canada have fallen into negative territory, meaning producers would have to pay to give their barrels away.
While WTI for May delivery was down by over 90 percent, June delivery was only down 10 percent. Brent on the other hand, which is already trading on the June contract, is down by less than 6 percent, suggesting that it is fears of U.S. storage capacity that are dragging on prices.
It is unclear at this point just how low oil prices will fall or whether there is any intervention large enough to turn this around in the short term. Nymex CME will now allow traders to negatively price for May futures. The mid- to long-term impact on oil prices is likely to be equally catastrophic, with bankruptcies and financial ruin setting markets up for a supply shortage and dramatic price spike.
For everyone from oil companies to industry professionals and even gasoline consumers, a stable oil price is always preferable to volatility and rock-bottom prices.
Story cited here.
