NEW YORK: 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.
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.
Crude oil is one of the most in-demand commodities, with the two most popularly traded grades of oil being Brent Crude and West Texas Intermediate (WTI). Crude oil prices reflect the market’s volatile and liquid nature, as well as oil being a benchmark for global economic activity. The oil price charts offer live data and comprehensive price action on WTI Crude and Brent Crude patterns.
But in general, crude oil prices are very low and continue to fall. Brent, an international benchmark, is in the mid-$20s and fell more than 9% on Monday.
Oil-producing countries and companies are trying to reduce their output, but they can't keep pace with the extremely rapid drop in global demand as the world economy hits the brakes.
That's creating a massive oversupply of oil and raising concerns about where to physically store it all.
Crude oil Price Drop | Price Drop Chart [ 2020 ]
Comments
Post a Comment