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.
Idaho judge denies Bryan Kohberger’s ‘bushy eyebrows’ motion
ICE dispels rumors about viral video showing agents smashing window to arrest illegal
Top Ivy League university in the hot seat as Congress ramps up investigation: ‘Almost all woke’
Must Watch: Trump’s Heartfelt Easter Message About Christ Puts Biden’s 2024 Easter Stunt to Shame
Al Sharpton’s Threat Works as Target CEO Folds to His Demand
Georgia school shooting suspect’s dad fights ‘epicenter’ murder trial: attorney
Tulsi Gabbard releases over 10,000 files related to RFK assassination
Did James Carville Just Kill the Democratic Party?
‘Community Leader’ Killed by Police Primed to Be the Next George Floyd … Then the Body Cam Video Was Released
‘Light on the truth’: Gabbard announces RFK files released months after Trump’s order
Top GOP lawmaker, Hochul trade barbs amid speculation Trump ally is jumping in gubernatorial race
Karen Read prosecutor wants to block defense from blaming after-party guests, pet dog in opening statement
Trump announces a conservative media star, a GOP governor,and others for Homeland Security Advisory Council
Poll position: How Trump’s approval rating compares to his presidential predecessors
After FSU Shooter Is Captured Alive, Public Fury Turns to Woman Who Casually Sipped Starbucks While Filming Victim
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.
