Historic day for oil markets as WTI crude closes below zero for first time

Financial Post

Of all the wild, unprecedented swings in financial markets since the coronavirus pandemic broke out, none has been more jaw-dropping than this collapse

NEW YORK — U.S. crude oil futures turned negative on Monday for the first time in history, ending the day at a stunning minus US$37.63 a barrel as traders sold heavily because of rapidly filling storage space at the key Cushing, Oklahoma, delivery point.

Brent crude, the international benchmark, also slumped, but that contract was nowhere near as weak because more storage is available worldwide.

The May U.S. WTI contract fell US$55.9, or 306 per cent, to settle at a discount of US$37.63 a barrel after touching an all-time low of -US$40.32 a barrel. Brent was down US$2.51, or 9 per cent, to settle at US$25.57 a barrel.

“The storage is too full for speculators to buy this contract, and the refiners are running at low levels because we haven’t lifted stay-at-home orders in most states,” said Phil Flynn, an analyst at Price Futures Group in Chicago. “There’s not a lot of hope that things are going to change in 24 hours.”

Physical demand for crude has dried up, creating a global supply glut as billions of people stay home to slow the spread of the novel coronavirus.

Refiners are processing much less crude than normal, so hundreds of millions of barrels have gushed into storage facilities worldwide. Traders have hired vessels just to anchor them and fill them with the excess oil. A record 160 million barrels is sitting in tankers around the world.

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Source: Reuters — Stephanie Kelly | Financial Post

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