United States oil price has fall down for the first time in history. Having already reached a 20-year low early on trading, West Texas Intermediate oil prices crashed later on Monday. Longer-term prices were more stable, but May contracts were literally valued at nothing.
The price of US oil has turned negative for the first time in history.
That means oil producers are paying buyers to take the commodity off their hands over fears that storage capacity could run out in May.
Oil demand has reached an all-time low all across the world as lockdowns across the world have kept people inside. The downfall has come as a result of a one-third decrease in demand for fuel and a global halt to the market, transport and economic activities that usually use oil.
There’s just one day left for the sellers of the May contract to find buyers for the oil, but it is getting hard to find those buyers. Storage tanks could hit their limits within the next 3 weeks. The West Texas Intermediate (WTI) benchmark dropped below -$30 as the contract deadline of May approached.
After the downfall in prices of oil, President Donald Trump said the US would look into buying up to 75 million barrels of oil to replenish the national strategic reserves but first it needs to be approved by Congress.
The strategic petroleum reserve is located in four locations which were originally build to protect the US from oil shortages. The reserve is able to store up to 727 million barrels of oil.
June prices for WTI were also down, but trading at above $20 per barrel. Meanwhile, Brent Crude the benchmark used by Europe and the rest of the world, which is already trading based on June contracts has also seen the downfall of 8.9% at less than $26 a barrel.