Why did US oil prices hit negative territory? I Inside Story Description video: It’s one of the world’s most valued commodities. But coronavirus lockdowns have overturned the dominance of oil.\nThe worth of a barrel of U.S. oil fell to less […]
Why did US oil prices hit negative territory? I Inside Story
It’s one of the world’s most valued commodities. But coronavirus lockdowns have overturned the dominance of oil.\nThe worth of a barrel of U.S. oil fell to less than nothing on Monday \nThat’s the first time in history, that the price has turned negative.\nThis means producers ended up paying buyers more than $30 a barrel to get oil off their hands.\nIt rebounded slightly to just over $2 the next day. That jaw-dropping slide is because the world has more crude than it can use.\nAnd it is also about how much oil can be stored. Storage facilities and even ocean tankers are filling up.\nFears of not finding a place to put oil in May means nobody wants crude. That’s led to a severe drop for West Texas Intermediate – a benchmark for U.S. oil.\nOil is traded on future contracts and prices for crude to be delivered in June are now at around $20.\nThe International benchmark for oil Brent crude also went down to its lowest in 18 years.\nSo, what will that mean for the U.S. and the global economy?\n\nPresenter: Richelle Carey\n\nBob Cavnar, oil and energy industry expert \nCornelia Meyer, CEO of Meyer Resource and an oil and gas expert\nStephen Innes, Chief Global Market Strategist, at Axicorp,a global institutional financial services company. \n\n\n- Subscribe to our channel: http://aje.io/AJSubscribe \n- Follow us on Twitter: https://twitter.com/AJEnglish \n- Find us on Facebook: https://www.facebook.com/aljazeera \n- Check our website: https://www.aljazeera.com/\n\n#AlJazeeraEnglish #US #Oil #InsideStory
The price of American oil returned from the negative zone
US oil prices return to positive territory after historic fall below zero.
US West Texas Intermediate (WTI) crude oil for May delivery rose $ 38.99 to $ 1.36 a barrel on Tuesday, after falling $ 37.63 a barrel in the previous session..
Brent crude for June delivery fell 48 cents, or 1.9%, to $ 25.09 a barrel.
«Lack of demand for black gold due to ongoing pandemic will lead to slower-than-expected growth in the US economy», – considers Edward Moya, Senior Market Analyst, OANDA Broker.
The collapse of oil prices is due to travel and flight restrictions around the world. Fuel demand decreased by 30%. This led to an increase in crude oil reserves and the problems of finding new storage locations..
The main US warehouse hub in Oklahoma is expected to be full in the next few weeks.
After the collapse in oil prices, the President of the United States Donald Trump said his administration is considering ending imports of crude oil from Saudi Arabia as a way to help the US drilling industry.
«It is pretty clear today that the main problem in the market is the surplus of raw materials in the US and the lack of storage resources.», – believes Michael McCarthy, Chief Markets Strategist at CMC Markets in Sydney.
Faced with such a situation, OPEC + members agreed to cut production by 9.7 million barrels per day. However, this will not happen until May. At the same time, the volume of reduction is not considered by experts as large enough to restore the market balance.
Meanwhile, U.S. crude oil inventories were set to rise by about 16.1 million barrels in a week.. Analysts had expected gasoline inventories to rise by 3.7 million barrels last week.
The American Petroleum Institute (API) plans to publish its data today, and the US Energy Information Administration’s weekly report will be released on April 22.