US oil price futures briefly turn negative for first time in history
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Combustion Industry News Editor
Oil prices in the USA turned negative last week, as supply continued to outstrip demand and storage sites filled, the BBC has reported. The price for a barrel of West Texas Intermediate fell to -US$37.63, as producers paid ‘buyers’ to take the fuel, even renting tankers for use of temporary storage. Analyst Stewart Glickman of CFRA Research described the situation as “off-the-charts whacky”, going on to say that the “demand shock was so massive that it’s overwhelmed anything that people could have expected.” The negative prices for WTI were something of an anomaly due to technicalities of the market (with futures contracts for May expiring and traders not wanting to take delivery of oil, and hence have to store it), and other oil prices (for example for the European index of Brent crude) remained positive, though low. Still, it highlights the intense pressures on oil producers brought about by the COVID-19 crisis, and suggests that producers around the world will have to agree to cut production further in order to gain some control over prices, at least until economic activity begins to recover, which is currently highly uncertain.