US crude oil prices rebound and have risen to a little above USD 1.10, after plunging below $0 for the first time in human history.
However even though it is no longer in the negative, the concerns remain, as the demand for both crude and refined oil in many sectors in the US and worldwide remain very low, leaving stockpiles of huge supplies of oil with nowhere to go.
Earlier, crude oil plunged to below USD 0.00 for the first time in human history. This means that producers may actually have to pay people to take surplus crude oil.
US crude oil futures – May futures – crashed into negative territory in an unprecedented 92% collapse yesterday.
Futures which were trading at USD 62 or higher per barrel three month ago are down 92 percent to as low as USD 1.02 per barrel.
The current price of a barrel of WTI oil for delivery next month is – USD1.34
The reasons for the crash are said to be a 'Black Monday' when there were no buyers, only seller of the US crude oil due to:
- A glut of oil,
- A shortage of storage facilities
- A massive 29 million barrels per day drop in demand
- Operations cut by industrial users and refiners due to COVID-19 destroying demand
May futures had earlier fallen to a low of negative $40.32 even as traders rushed to find storage on land or at sea of both crude and refined products, as no one wanted delivery of oil.
Saudi and Russian traders are flooding the market and have been in a fight to fill as many oil tanks as fast as possible.