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.
Bombshell Video Catches Reported Insiders Admitting Somalis Are Paying For, Harvesting Omar Votes
Obama Presidential Hits Jaw-Dropping Total Cost of Over $1 Billion, Tripling Past Estimates
Man shot and killed inside New York City subway station in Midtown Manhattan: NYPD
California diners are cutting back as costs soar — but restaurant owner reveals one trend that’s booming
Watch: Stunt Chopper at Navy SEAL Fundraiser Thrills Guests With Small Explosions and Red, White and Blue Smoke Show
Hero Dad Who Stopped Oregon School Shooting Doesn’t Want an Award, Tragically Feels Guilt Over Not Saving More
‘Moderate’ AG’s office turned to groups that spent years suing prisons for recruiting help: emails reveal
A Symbolic Detail Hidden in Background of Netflix’s New ‘Narnia’ Trailer Has Fans Fearing the Worst
Alito Shuts Down Retirement Talks as Midterms Threaten GOP Path to Confirm Successor
Pope Leo XIV leaves hospital and returns to Vatican after lung cancer surgery
From handyman to House history: HVAC mogul Joe Strada pushes trade schools, business mindset in Florida race
They’ll Never Learn: As Crime Sprees Plague Seattle, It’s Socialist Mayor Introduces Soft-on-Crime ‘Connection Court’
Ilhan Omar should be jailed, deported if citizenship fraud proven, Top House Republican says
They May Come to Your State Too: Flood of West Nile Fever Cases Hits LA Thanks to Mosquito Swarms
When purity politics runs its course: Even the most strident DSA politicians must learn to compromise
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.
