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US Oil Prices Turned Negative for the First Time on Record in light of COVID-19 Pandemic

Monday, 20 April 2020 13:57

US oil prices turned negative for the first time on record yesterday as North America's oil producers deal an unprecedented oversupply of crude left by the coronavirus crisis.

The price of US crude oil collapsed from $18 a barrel to -$38 in a matter of hours, forcing oil producers to pay buyers to take the glut of crude which they cannot store, as rising stockpiles of crude threaten to overwhelm oil storage facilities.

A record 160 million barrels of oil was being stored in "super-giant" oil tankers outside the world's largest shipping ports, including the US Gulf, following the deepest fall in oil demand in 25 years because of the coronavirus pandemic.

Global oil prices are expected to begin recovering over the second half of the year as tight restrictions on travel to help curb the spread of the virus are lifted, raising demand for fuels and oil.

The world's largest oil-producing nations have agreed a deal to hold back between 10 to 20 million barrels of oil a day from the global market from May, and many oil companies are likely to shut their wells as financial pressures mount.
 

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