Due to the worldwide epidemic, crude oil prices in the futures market reached below zero for the first time in history. The American benchmark crude West Texas Intermediate (WTI) saw its worst day ever. WTI futures prices for May delivery closed below zero at -37.63 dollars / barrel. Earlier, trading started at $ 18.27 a barrel and went down so far. At the same time, the price for June reached $ 21.69 per barrel. Now, when the market opens on Tuesday, traders can make a profit.
Global benchmark Brent crude fell 6.3 percent to $ 26.32 a barrel. This decline is reflecting investor concern. According to the agreement between the US and the oil producing countries, production will be reduced by 9.7 lakh barrels per day from May. Consumption is expected to fall by a third in April.
What does it mean, prices will not fall immediately. Crude oil prices do not mean that oil has become cheaper from today or tomorrow. In fact, the contracts given for the supply of crude oil in May have now gone negative. Explain that the oil producing countries are asking to buy oil from other countries of the world, but due to the global lockdown, no country is buying oil, so the price has fallen so much to the historical level.
Why oil producing countries are asking to buy oil by paying money. This decline also means that oil producing countries are now requesting buyers to buy oil. He is saying this because he is afraid that if the oil is not sold, the storage problem will increase.Coffee became cheaper than bottled water. Trading started in the US oil market at $ 18.27 per barrel and reached a low of one dollar in the first phase and reached negative as the market closed. It is worth noting that the price of crude oil has become cheaper than a cup of coffee-bottled water in America.
Why this happened, price fell due to these reasons The fall in oil prices has been recorded on the back of demand coming down due to Corona Virus epidemic and worse results from companies this year. At the same time, the price of Brent crude fell by 6.3 percent to reach the level of $ 26.32 per barrel. Lockdown and trips are banned worldwide to prevent the spread of corona virus infection. This has led to a huge drop in demand for crude. Since the start of the price war between Saudi Arabia and Russia, the price of oil has fallen further.
However, earlier this month the two countries and some other countries together decided to cut production by about 10 million barrels per day to increase the price of oil, but the price continues to fall.Difficulties will increase due to storage crisis.
This decline also means that the problem of storage will now arise in front of oil producing countries. In view of this, many oil firms are hiring tankers to keep the increased stock. This is the reason why he is requesting money to buy from all the countries. Oil consumption is also reduced due to lockdown. This had an impact on oil prices in the US and she went below negative.