What do negative crude oil prices mean at the pump? Description video: The price of a barrel of benchmark U.S. oil plunged below $0 a barrel on Monday (April 20) for the first time in history, a troubling sign of […]
What do negative crude oil prices mean at the pump?
The price of a barrel of benchmark U.S. oil plunged below $0 a barrel on Monday (April 20) for the first time in history, a troubling sign of an unprecedented global energy glut as the coronavirus pandemic halts travel and curbs economic activity. But what do negative crude prices mean in the real world? \n\nSubscribe: http://smarturl.it/reuterssubscribe\n\nReuters brings you the latest business, finance and breaking news video from around the globe. Our reputation for accuracy and impartiality is unparalleled.\n\nGet the latest news on: http://reuters.com/\nFollow Reuters on Facebook: https://www.facebook.com/Reuters\nFollow Reuters on Twitter: https://twitter.com/Reuters\nFollow Reuters on Instagram: https://www.instagram.com/reuters/?hl=en
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.