Oil prices

Crude oil price plunges below

oil price plunges below zero for first time in unprecedented wipeout The price on the futures contract for WTI crude that is due to expire Tuesday fell minus $37.63 a barrel. By Bloomberg | Updated: Apr 21, 2020, 09.32 AM IST 0:00 / 1:10 US oil hits sub-zero for 1st time in history as coronavirus keeps people home By Catherine Ngai, Olivia Raimonde and Alex Longley Of all the wild, unprecedented swings in financial markets since the coronavirus pandemic broke out, none has been more jaw-dropping than Monday’s collapse in a key segment of U.S. oil trading. ADVERTISEMENT The price on the futures contract for West Texas crude that is due to expire Tuesday fell into negative territory — minus $37.63 a barrel. That’s right, sellers were actually paying buyers to take the stuff off their hands. The reason: with the pandemic bringing the economy to a standstill, there is so much unused oil sloshing around that American energy companies have run out of room to store it. And if there’s no place to put the oil, no one wants a crude contract that is about to come due. Underscoring just how acute the concern over the lack of storage is, the price on the futures contract due a month later settled at $20.43 per barrel. That gap between the two contracts is by far the biggest ever. ADVERTISEMENT “The May crude oil contract is going out not with a whimper, but a primal scream,” said Daniel Yergin, a Pulitzer Prize-winning oil historian and vice chairman of IHS Markit Ltd. “There is little to prevent the physical market from the further acute downside path over the near term,” said Michael Tran, managing director of global energy strategy at RBC Capital Markets. “Refiners are rejecting barrels at a historic pace and with U.S. storage levels sprinting to the brim, market forces will inflict further pain until either we hit rock bottom, or COVID clears, whichever comes first, but it looks like the former.” ADVERTISEMENT Since the start of the year, oil prices have plunged after the compounding impacts of the coronavirus and a breakdown in the original OPEC+ agreement. With no end in sight, and producers around the world continuing to pump, that’s causing a fire-sale among traders who don’t have access to storage. The extreme move showed just how oversupplied the U.S. oil market has become with industrial and economic activity grinding to a halt as governments around the globe extend shutdowns due to the swift spread of the Covid-19. An unprecedented output deal by OPEC and allied members a week ago to curb supply is proving too little too late in the face a one-third collapse in global demand. ADVERTISEMENT There are signs of weakness everywhere. Even before Monday’s plunge, buyers in Texas were offering as little as $2 a barrel last week for some oil streams. In Asia, bankers are increasingly reluctant to give commodity traders the credit to survive as lenders grow ever more fearful about the risk of a catastrophic default. In New York, West Texas Intermediate for May delivery dropped as low as negative $40.32 a barrel. It’s far below the lowest level previous seen in continuation monthly data charts since 1946, just after World War II, according to data from the Federal Reserve Bank of St. Louis. Brent declined 8.9% to $25.57 a barrel. Crude stockpiles at Cushing — America’s key storage hub and delivery point of the West Texas Intermediate contract — have jumped 48% to almost 55 million barrels since the end of February. The hub had working storage capacity of 76 million as of Sept. 30, according to the Energy Information Administration. Fund Inflow Despite the weakness in headline prices, retail investors are continuing to plow money back into oil futures. The U.S. Oil Fund ETF saw a record $552 million come in on Friday, taking total inflows last week to $1.6 billion. The price collapse is reverberating across the oil industry. Crude explorers shut down 13% of the American drilling fleet last week. While production cuts in the country are gaining pace, it isn’t happening quickly enough to avoid storage filling to maximum levels, said Paul Horsnell, head of commodities at Standard Chartered. ”The background psychology right now is just massively bearish,” Michael Lynch, president of Strategic Energy & Economic Research Inc said in a phone interview. “People are concerned that we are going to see so much build up of inventory that it’s going to be very difficult to fix in the near term and there is going to be a lot distressed cargoes on the market. People are trying to get rid of the oil and there are no buyers.” In Video: US oil hits sub-zero for 1st time in history as coronavirus keeps people home READ MORE:why is crude oil price falling today |Nirmala Sitharaman |KPMG |FM |crude oil price today |crude oil price |Companies Act |Budget speech Akshya Tritiya in lockdown? LATEST COMMENT GOVT NEEDS FUNDS THE RICH AND THEIR ASSOCIATIONS ARR ASKING FOR FISCAL STIMULUS TO PROTECT THEIR PROFITS THE SO CALLED FAKE POOR ARE ASKING FOR MORE FREEBIES AND SUBSIDIES AND DOLES AND ALMS. THE DISEASE DEMANDS MORE INVESTMENT BIN HEALTH. THE SLOWING DOWN OF ECONOMY GLOBALLY AND IN INDIA MEANS LESS REPATRIATION AND LESS REVENUE ALL THIS REQUIRES FUNDS .THE ONLY SOURCE IS FUEL .MAINTAINING FUEL PRICES WILL PREVENT ITS UN NECESSARY USAGE AND GENERATE INCOME FOR THE GOVT TO FINANCE THE VARIOUS INITIATIVES TO BACK THE COUNTRY’S ECONOMY BACK ON COURSE. – Kishore VIEW ALL 18 COMMENTADD COMMENT PREVIOUS Too much oil: How a barrel came to be worth less than nothing NEXT Gold drops to lowest in more than a week as dollar gains Most Recent Tatas gun for $1-billion ‘revolver lines’ to fund European operations Donald Trump is shutting down all immigration to US Coronavirus Updates: Tamil Nadu, Rajasthan case count hit 1500-mark; India tally at 17,656 Too much oil: How a barrel came to be worth less than nothing Most Read Crude oil price plunges below zero for first time in unprecedented wipeout Coronavirus Impact: Infosys suspends promotions and salary hikes Cognizant hit by ‘Maze’ ransomware attack View: If lockdown was managing public health, now comes the economic challenge ADVERTISEMENT Business News › Markets › Commodities › News › Crude oil price plunges below zero for first time in unprecedented wipeout POPULAR CATEGORIES StocksIPOs/FPOsMarkets DataMarket MogulsExpert economyCoronavirus impactBreaking newsSBI share priceYES Bank share priceSGX NiftySensex LiveIRCTC share priceInfosys share priceRupeeAadhaar CardGold Rate TodayHow to save Income TaxCurrency Converter IN CASE YOU MISSED IT GST CollectionJet Airway MORE FROM MY BLOG FOLLOW ME