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.
Former House intel leader points to Dem rhetoric ‘encouraging’ violence as 8th man charged in UFC terror plot
Hollywood Libs Pour Love on Beijing, Tout China as ‘First Petro-Zero Economy,’ But Facts Show Different Story
Global Elitism at Work: Amid Heatwave, European Commission Shuts Off AC – But Only For Lower-Level Workers
Bill Barr says Todd Blanche isn’t ‘a toady,’ urges senate to confirm Trump’s AG pick
Kentucky man charged with boating under the influence after female passenger, 19, goes missing
Are You Gay Enough To Get A California Utilities Contract? Here’s The Test
How a Ministry Is Spreading Christianity in Iran Using AI
Women accuse Pearadise founder of preying on them by turning ‘safe space’ into mansion of manipulation
NY governor hopeful vows showdown with Mamdani over socialist agenda: ‘I will stop him’
Firefighter brother of 9/11 victim incensed by ‘radical’ Muslims winning key Dem primaries
Trump-backed Letlow takes on John Fleming in runoff to replace Bill Cassidy
Incoming socialist DC mayor has a weak hand against Trump administration
People On Food Stamps Can Keep Buying Junk With Your Tax Dollars, Obama Judge Rules
Lawyer who beat Hawaii gun law calls state’s reliance on Black Code ‘disgraceful’
American Woman in Mexico Convicted for Drugging and Killing Men She Met on Dating Apps
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.
