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.
2028 Dem hopeful’s longtime ally exposed for deep ties to CCP officials: ‘Good friends’
GOP mail-in voting proposal could impact millions of Americans ahead of midterms
DOJ threatens to cut billions in welfare funding from states for failing to report illegal migrants
Pentagon orders mandatory testosterone tests for male troops 30 and older
Social media is Lindsay Clancy wild card that could tilt potential retrial to the defense, retired judge says
US military boards, searches and sinks vessel allegedly supporting Los Choneros narco-terrorists
15-year-old accused of firing into crowd during deadly Seattle mass shooting claims self-defense
Maine’s high court gives father final say over daughter’s church attendance
FAA seeks permanent airspace restrictions near Trump’s Mar-a-Lago as expert warns rules are ‘not good enough’
Watch: Black Entrepreneur Humiliates Jemele Hill on CNN After She Claims Capitalism and White Supremacy Are Connected
The primary is over; now come the primetime mistakes
Trump Clarifies Stakes of Texas Senate Battle: If Talarico Wins, ‘I Will Be the Last Republican President’
Blue state creates six-figure role for trans inmate services amid budget shortfalls
Vance’s mom fires back at El-Sayed over second family jabs: ‘Probably punch him’
Breaking: Mass Shooting in Downtown Minneapolis, Civilian Killed, Officers Shot
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.
