U.S. crude oil futures collapse below $0 amid coronavirus crisis
Date: 2020-04-21   Author: Saipriya Iyer  Category: #news

U.S. crude oil futures collapse below $0 amid coronavirus crisis

The U.S. crude oil futures have recently dropped below $0 and turned negative for the 1st time in history due to the coronavirus pandemic that has hindered its demand. The price was settled at minus $37.63 per barrel, as traders paid to supply the oil to the market. Additionally, Brent crude contract also slumped; however, more storage of this oil is available across the globe.

The global supply glut for crude oil is due to the rising acceptance of social distancing guidelines to curb the spread of the deadly coronavirus. Traders recently left the oil futures contract of May in a frenzy due to the non-availability of space to store the crude oil. However, the June West Texas Intermediate was settled at a higher level of $20.43 per barrel.

The May WTI contract for crude oil fell by 306% or $55.90 to settle at a discount of $37.63 per barrel as it touched an all-time drop of -$40.32 per barrel. Brent crude was down by 9% or $2.51 after settling at $25.57 per barrel. Refiners are currently processing less crude oil than usual, leading to a large number of barrels gushing into the storage facilities worldwide. There is also a surge in demand for vessels from traders to store the excess oil, which leads to a record of 160 million barrels in tankers globally. U.S. Cushing crude oil stockpiles reportedly increased 9% in the third week of April, totaling nearly 61 million barrels.

The lack of demand for actual oil has led the investors to leave the May contract ahead of time. When the contract expires, the traders will need to decide whether to roll into futures contracts for later months or take the delivery of the oil. Since the beginning of 2020, the Brent crude oil prices have dropped nearly 60%, while U.S. crude oil futures have collapsed nearly 130% to the level far below the break-even costs that are necessary for several shale drillers. This has led to drastic budget cuts and drilling halts.

Source credit:

https://in.reuters.com/article/us-global-oil/u-s-oil-falls-more-than-10-to-lows-not-seen-since-1999-idINKBN2210V9?il=0



About Author


Saipriya Iyer

Saipriya Iyer

Saipriya Iyer currently works as a content developer for AlgosOnline. A computer engineer by profession, she ventured into the field of writing for the love of playing with words. Having had a previous experience of 3 years under her belt, she has dabbled with website...

Read More

More from Saipriya


Post Recommendents

Hip Osteoarthritis Pain Drug Market Growth Projection from 2021 to 2026
Author: Sachin Pashte

A collective analysis on ' Hip Osteoarthritis Pain Drug market' is covered in this new research, available at Market Study Report, LLC, that offers an exhaustive study based on current trends influencing this vertical throughout assorted g...


Spine Osteoarthritis Pain Drug Market Report, Growth Forecast, Industry statistics Till 2026
Author: Sachin Pashte

A concise assortment of data on ' Spine Osteoarthritis Pain Drug market' is covered in a newly published research added to the repository of Market Study Report, LLC. It offers an exhaustive study targeting current market trends influencin...


Osteoarthritis Pain Solution Market Emerging Trends, Strong Application Scope, Size, Status, Analysis and Forecast to 2026
Author: Sachin Pashte

A detailed research on ' Osteoarthritis Pain Solution market' recently added by Market Study Report, LLC, puts together a concise analysis of the growth factors impacting the current business scenario across assorted regions. Significant i...