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 Russian president warns Europe’s ‘peaceful sleep is over’ after Romania drone hit
Kevin Kiley’s two-front fight: Battling California redistricting while defending his own seat
Dead voter allegation fuels concerns about voting safeguards as blue state official turns herself in
WATCH: America’s first ‘formerly undocumented’ congressman delivers ultimatum at besieged ICE facility
‘Your Time Has Passed’: Democrats Furious After Jill and Hunter Biden Burst Back Into Spotlight
White House Launches Aliens.Gov After Series of Cryptic Messages: ‘They Walk Among Us’
Amtrak fire near Penn Station triggers major NYC commuter disruptions, NJ Transit and LIRR cancellations
‘Ghosts’ on Florida highways: Roadside sting snares 249 illegal immigrants, officers warn many more hiding
Blistering report exposes how national K-12 group’s DEI agenda is trickling down to local schools
Democrats ‘selling their soul’ to embrace Platner are in for rude awakening with Maine voters: GOP lawmaker
Can congressional Democrats co-opt MAHA from the MAGA-verse?
Democrats lash out at Bidens as former first lady relitigates the past: ‘They suck’
With tough midterm elections looming, Trump 2028 GOP revenge list grows
12-year-old boy dies after raft capsizes during school trip in Pennsylvania
BREAKING VIDEO: Blue Origin Rocket Suffers Massive Explosion After Catastrophic Failure at Cape Canaveral
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.
