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.
Republican who reportedly dropped out defeats Trump’s pick in key swing-district primary
Republicans move to oust embattled Florida GOP lawmaker in bitter primary fight
Musk Issues Stark Counter-Threat After Mamdani Team Member Declared Him ‘Valid Military Target’ According to Report
House Republican Ends Re-Election Campaign After Ethics Committee Recommends Censure
Details on Heavily Armed Person Roaming Golf Course Before Trump Visit Emerge, Notebook Seized
Disturbing: Gossip Columnist Perez Hilton Hospitalized After Harming Self on TikTok Live Stream
Takeaways from crucial primary elections across the country and more top headlines
Suspects in deadly Connecticut home invasion arrested in attack that rocked beach town
GOP governor endorses candidate challenging Trump-backed congressman in Republican US House primary
WATCH: Smithsonian director admits she sees history as ‘tool’ of ‘social justice’ in resurfaced 2025 clip
Marine veteran Las Vegas officer killed in shooting; armed suspect also dead
Democrats’ bitter civil war hits Michigan, but biggest prize still up for grabs
Trump warns Iran will be hit ‘really hard’ if nuclear negotiations collapse again
Socialist tenant organizer who blasted ‘sell-out Democrats’ loses Midwest primary
Dems rally behind Michigan prosecutor to champion party in crucial House race
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.
