Re:US oil trades at negative prices for first time in history
by ccffpphh on Monday April 20, 2020 @03:42PM
(#22927614)
This is due to more of a market structure issue - the May contract expires tomorrow and the negative price really just reflects the price of storing crude. Why? There's nowhere to store it, demand is incredibly low, tankers and reserves are all filled up thus whoever holds the contract on settlement is responsible for storage, thus the negative price. Look at the June contract for something more accurate.
That being said, I expect something like this to transpire for June as well, possibly earlier than just a day from expiry, so long as production stays above 0 and demand stays as low if not lower.
That being said, I expect something like this to transpire for June as well, possibly earlier than just a day from expiry, so long as production stays above 0 and demand stays as low if not lower.