As most of the world is experiencing lockdown, the demand for fuels is an all-time low, and this has resulted in low prices for crude oil in the markets. However, nobody thought of the negative price for the U.S. Crude oil, which was selling at minus $40.32 a barrel on Monday. Yes, it is right; the sellers are paying from their pockets to those who are willing to buy the oil for May and have a stocking facility.
“What happened in the US oil futures should not be looked at in isolation,” stated Daniel Clover, Market Engagement Manager – Middle East at S&P Global Platts. “Right now, there’s an abundance of supply and a total absence of demand.
“The pressure on WTI crude is a global phenomenon — no one will be spared by the drop in the price of crude and the decline in demand for oil supplies.”
The reason is the shortage of spaces that can store crude oil. All the available remote spaces, as well as the offshore barges, have been filled, so it is better to sell the oil by paying for it prior to the expiry of May Futures contracts on Tuesday. Oil producers are working to rent new facilities to store the new oil.
“Oil producers are struggling to find a home for their commodity, and the one at Cushing is said to be near full capacity,” stated Colover. “When you produce, you send it to a refinery, a tank for storage, or onto a boat.”
While the U.S., OPEC, and Russian suppliers agreed to reduce production (which will actually happen in phases in the coming month), they can’t do anything about the already pumped out oil. This decline is the U.S. Crude oil price has affected the stock market badly. The S&P 500 was dropped around 1.8% on April 20.
If you are a vehicle owner in the UAE thinking to get paid on refilling your fuel tank, you are mistaken. Brent is actually hovering around $21 per barrel and the prices for April have already been set.
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