The May contract for the United States' West Texas Intermediate (WTI), a benchmark for the United States, ended on Monday at sinking to -37.63 dollars per barrel (after reaching a negative value of 40.32 dollars per barrel). ), something never seen before - and falling $ 56 compared to Friday's close.
The $ 9.75 value had been the lowest intraday price since oil futures were launched in 1983 on the New York market for raw materials (NYMEX). That is, since the Reagan Administration that crude oil was not so cheap.
Monday's crash at WTI leaves US crude prices 159.4% below the January peak of $ 63.27.
The fact that the May contracts are due to expire this Tuesday has led to the closing of many positions, with traders preferring longer terms, which helped to lower prices.
For its part, the North Sea Brent, traded in London, lost 5.73% to $ 26.47 per barrel.
The supply of crude oil in the markets has been increasingly in surplus in view of the continuous fall in demand due to the pandemic of covid-19. And, due to the lack of storage space on land, many companies are already turning to supertankers. The crude that is currently stored at sea has already reached a new record of 160 million barrels (double the level of two weeks ago).
The problem of lack of storage is affecting mainly American producers. "With storage space filling up, the price of oil for immediate delivery has sunk," Ole Hansen, an analyst at Saxo Bank, told ProActiveInvestors.
The spread of around $ 60 between May and June contracts is a clear sign that physical oil traders do not have space available. June's WTI contract continued to drop 9% to $ 22.70 at the end of the day.
Saxo believes that only a strong change in fundamentals - such as producers being forced to stop or there is a significant improvement on the demand side - can now stop this fall in prices.
In Cushing (Oklahoma) - where the WTI is stored - there is only room for 21 million barrels and it should be exhausted in May.
Since Cushing acts as the WTI's price fixing point, the increase in reserves puts a negative pressure on spot prices, which originates the so-called contango phenomenon - when futures contracts have higher prices than immediate delivery .
It should be noted that as it is in Cushing that the oil traded at NYMEX is stored, this surplus causes local crude prices to drop compared to the black gold that is delivered in other regions of the world.
Last week, the Trump Administration said it was considering paying US oil producers to leave crude in the wells. In other words, you want to pay for the drills not to work.
For its part, the IEA stressed that the US will experience an "unprecedented" drop in its oil production this year due to low prices - which make life very difficult for shale oil companies [oil extracted from oil shale rocks] .
In addition, crude inventories in the US are constantly increasing. US crude oil reserves increased by 19.2 million barrels two weeks ago, the US Department of Energy announced last Wednesday. It was the biggest weekly increase since these data started to be compiled in 1982.
U.S. crude stocks are now over 500 million barrels - for the first time since June 2017, according to ClipperData data.
