Firat time in History – Crude Oil Prices Negative as storage capacity runs low, and a quirk in pricing wipes out one benchmark
Something bizarre happened in the global markets on Monday: The price of a barrel of oil went negative.
Oil prices tumbled as the economic crisis set off by the coronavirus pandemic continued to destroy demand for energy, and as concerns grew that storage tanks in the United States were near capacity and unable to hold all the unused crude.
The price of US crude oil collapsed from $18 a barrel to -$38 in a matter of hours, forcing oil producers to pay buyers to take the glut of crude which they cannot store, as rising stockpiles of crude threaten to overwhelm oil storage facilities.
West Texas Intermediate futures for May delivery, which expire Tuesday, plunged more than 100% to -$37.63 a barrel. That means sellers have to pay someone to take the oil off their hands. Brent crude oil prices, which have already rolled over to June-delivery contracts, fell 8.9% to settle at $25.57 per barrel
The problem of the global supply-demand imbalance has started to really manifest itself in prices.As production continues relatively unscathed, storages are filling up by the day. The world is using less and less oil and producers now feel how this translates.
The collapse will be a blow to US president Donald Trump, who has gone to great lengths to protect the oil sector, including backing moves by Opec and Russia to cut production and pledging support for the industry.
For Developing Country like India who is importer of Oil, it would be interesting to see if Govt will able to increase startegic Reserves