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.
Massachusetts Governor Signs New Law Blocking ICE Access to Several Locations
DSA Governor Candidate Hires OnlyFans Model as Deputy Campaign Manager
Florida man accused of killing nurse mom who helped him despite repeated arrests for threatening her: sheriff
Miss North Carolina USA pageant producers fire back after winner says she lost title over faith
WNBA Commissioner Announces League Is Reviewing Trans Inclusion After Former NBA Players Declare for Draft
Justice Department Settles With Pro-Life Father of 11 Whose Home They Busted Into
IN CHARTS: A visual breakdown of the Smithsonian’s billion-dollar taxpayer-funded budget
Socialists rising in Colorado? Send in the Marines, GOP nominee says
Why Stephen Miller thinks orders limiting birthright citizenship will go differently this time
EXCLUSIVE: Talarico caught on tape giggling about his church housing illegal immigrants set for deportation
Two dead, including infant, after boat capsizes in New York Harbor; 12 rescued
Teen accused of killing 10-year-old cousin Lily Peters may avoid November trial after new hearing scheduled
WATCH: Dems stand by Maine nominee hit with report he fathered children with his second cousin
Hawaii contractor nominated to construct GOP comeback after two-decade Democratic hold on governor’s mansion
Hawaii Gov. Josh Green cruises to Democratic primary win, sets up fall matchup with GOP nominee
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.
