Posted in: Last updated:
The price of a barrel of oil for May delivery, listed on the New York market, fell below zero for the first time in history. This means that investors are willing to pay to get rid of crude and that they have to find buyers as soon as possible, while the contract deadline expires on Tuesday.
For the first time in history, after a stormy trading session, it deteriorated Price of a barrel of oil May delivery listed on the New York market is below zero with the end of trading, which means that investors are willing to pay to get rid of crude.
As the May contract lead time expires on Tuesday, dealers had to find buyers as soon as possible.
But with storage facilities in the United States drastically filling up in recent weeks, dealers have been forced to pay people to find buyers, which has caused WTI crude price to reach $ 37.63 below zero as trading ends.
“It’s a contract for an item that nobody wants to buy,” said Matt Smith of the Clipper Data Center.
This unprecedented deterioration comes as a result of the repercussions of the emerging Corona virus, which destroyed the global economy by forcing billions of people to stay in their homes to stop the spread, and by a price war between Russia and Saudi Arabia.
The price war led to a glut in US reserves, which negatively affected shale oil producers in the United States.
OPEC announced last week to reach an agreement between the organization and its partners to reduce production by about ten billion barrels per day as of May, but that was not enough.
“The demand for gasoline and diesel fuel is zero,” said John Kildave of the Agen Capital Center. “The demand has evaporated.”
But Smith considered Monday that the drop in prices to below zero is a response to the lack of storage possibilities before the expiry of the May contract period, Tuesday, stressing that once that deadline expires, prices will return to above the zero level.
France 24 / AFP