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.
The Harsh Reality Everyone’s Missing About Massive Lithium Find in Appalachia
Rand Paul vows to keep pressure on Fauci as statute of limitations on criminal referral expires Monday
Fact Check: Is Hantavirus Poised to Become a COVID-Style Pandemic?
Virginia Democrats roasted over spelling mistakes in redistricting documents
This Is How Terror Spreads: 3 Australian Women Back from Syria Face Slavery, Terrorism Charges
Supreme Court’s junior justice goes on solo tear as Trump fights put her at odds with the bench
Mayor Overruled After He Dissolved Entire Police Force Following Dispute with His Wife
AOC, asked about running for president, says her ambition is ‘way bigger than that’
Nancy Guthrie was alive when abducted, blood evidence shows ‘last stand’ on front porch: retired FBI agent
Where Trump, GOP vs Democrats redistricting battle heads next in wake of key court rulings
Harris accuses Trump allies of trying to ‘rig’ 2026 midterms after Virginia court tosses redistricting measure
Minnesota nonprofit accused of siphoning $6.5M to fund Vegas trips, luxury cars, private liquor store
Alabama mother sentenced to life for hiring hitman to kill her child’s father over custody dispute
Trump warns college sports could be ‘lost forever’ as committee pushes changes, Congress urged to act
Duffys fire back after Pete Buttigieg, husband attack new road trip TV series: ‘Radical, miserable left’
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.
