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.
Top DHS lawyer turns tables on 128 ex-judges after Bar declines ‘Worst of the Worst’ complaint
Ted Cruz names ‘most powerful Democrat’ as he warns socialist rise has paralyzed bipartisanship
Blue state school district accused of defying Supreme Court, hiding gender transitions from parents
Coast Guard recovers 47 bales of suspected marijuana worth $2.4M after intercepting go-fast vessel
Trump administration proposes stripping tax-exempt status from schools using race-based programs
Karen Read’s lawyer says Clancy defense attorney may be ‘cut from a different cloth’ as deliberations drag on
US military took down approximately 100 suspected cartel drones at southern border in August
Lindsay Clancy jury wraps day 6 with bombshell one-juror standoff, deliberations to resume Friday
WATCH: Bystanders, police lift Volkswagen off woman pinned underneath after dramatic e-bike crash
Missouri high court blocks GOP-backed congressional maps ahead of midterms; Trump blasts ‘ridiculous’ ruling
Clancy Verdict Deadlocked at 11-1, Defense Pushes for Holdout to Be Removed in Heated Exchange with Judge
Excavation set to begin on Trump administration’s 250-foot triumphal arch amid legal battle
GOP candidate gets busted trying to plant drugs on his political rival
With Gloria Steinem’s Death, Establishment Media Silences the Conservative Half of America
Court Forbids Mom to Take Daughter, 13, to Normal Christian Church – Used the Word ‘Cult’ in Official Docs
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.
