US oil market bloodbath

US oil market bloodbath

Business Government News News in Image US World

US crude oil futures plunged below $0 on Monday for the first time in history, amid a supply glut caused by coronavirus, finishing the day at a shocking minus $37.63 a barrel as desperate traders charged to get rid of oil, international media announced.

US oil market bloodbath

The international standard, Brent crude, also plunged, but that contract was nowhere near as poor as more storage is available worldwide. The US standard, West Texas Intermediate, traded as low as -$40.32 a barrel in a day of oil-market turmoil. Monday’s settlement price was -$37.63, versus Friday’s $18.27. Traders capitulated in the face of US-wide restricted access to storage space, including Stafford, Oklahoma’s key distribution point for the region.

The failure would be a blow to Donald Trump, who has taken great care to protect the oil market, including supporting efforts by OPEC and Russia to slash supply and pledge industry support.

If the low prices will filter down to customers, who usually see lower oil prices at the pump turn into cheaper fuel is uncertain. Traders fled Monday in fear from the expiring May U.S. oil futures contract with no place to position the commodity, but the June WTI contract settled at a much higher price of $20.43 a barrel.”It will usually be a boost to the global economy,” said John Ki duff, New York hedge fund partner Again Capital LLC. “An additional 2 per cent of GDP would usually be nice. You don’t see the money, because nobody spends on the oils. After hitting an all-time low of -$40.32 a barrel, the May US WTI contract plunged $55.90, or 306 percent, to settle at a discount of $37.63 a barrel. Brent was down $2.51, or 9%, to settle a barrel at $25.57.

Brent, the international standard, lost 8.9 per cent on Monday to fall to $25.57 a barrel, but is less immediately plagued by storage issues. Brent is a seaborne crude allowing traders to easily ship it to areas of higher demand.”It’s like trying to explain something unprecedented and seemingly unreal,” Rusted Energy oil market analyst Louise Dickson said. “Price shut-ins or even bankruptcies could now be cheaper for some operators to get rid of what they produce, instead of paying tens of dollars.”Refiners refine much less crude than usual, and hundreds of millions of barrels have gushed into worldwide storage facilities. Traders have only hired vessels to anchor them, loading them with the excess crude. There is an estimated 160 million barrels sitting in tankers worldwide.