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Price of WTI oil drops to negative level first time in history

21.04.2020,11:04


April 21, Fineko/abc.az. May’s WTI futures ended the latest trading at minus $37.63 per barrel, down 306%, amid traders' concerns about overcrowded oil storage facilities in the face of record-low global demand.

The sharp drop in the demand for oil in the context of the coronavirus pandemic has led to the fact that the market is flooded with oil, and there is not enough storage capacity for it. In this regard, producers are forced to pay buyers for taking the extracted oil from producers.

According to Dow Jones, the decline in the WTI price on Monday was the record since tracking this data began in 1983.

The May contract for WTI expires on Tuesday. The June contract for WTI fell by $4.6 (18.3%) to $20.03 per barrel at the end of the trading on Monday.

The rapid filling of reserve storage facilities, including in Cushing, makes traders doubt that they will be able to find spare capacity in May, which leads to a significant price difference between the May and June contracts.

June’s Brent crude futures on the London ICE Futures Exchange fell by $2.27 (8.08%) to $25.81 per barrel.

 

Keywords: WTI Brent