Oil Price Collapses to NEGATIVE 37 US dollars per barrel. By Eustance Huang.
West Texas Intermediate crude for May delivery fell more than 100% to settle at negative $37.63 per barrel, meaning producers would pay traders to take the oil off their hands. …
Traders cautioned that this collapse into negative territory was not reflective of the true reality in the beaten-up oil market. The price of the nearest oil futures contract, which expires Tuesday, detached from later month futures contracts, which continued to trade above $20 per barrel. ….
The only buyers of oil futures [for immediate delivery] are entities that want to physically take the delivery like a refinery or an airline. But demand has dropped and storage tanks are filled, so they don’t need it.
Not as big a deal as it sounds. It’s only for oil that is immediately delivered. Deliveries are disrupted by the virus and recent low prices mean that all the world’s oil storage space is full.
Makes a joke of the peak oil concept. We still don’t seem to have reached that, but it will only be obvious in retrospect.
UPDATE from ZeroHedge:
Many inexperienced traders suddenly realized that instead of an asset, oil had become a liability, having only hours to find a place where to receive delivery of physical barrels of oil, and failing to do that, finding a greater fool to dump the deliverable obligation to. Only it wasn’t so easy.
As a result, a game of explosive hot potato (or rather highly flammable black gold) ensued …
Maybe time for Australia to refill its strategic petroleum reserve, which is currently below 20 days — compared to the promised and agreed upon 90 days.
hat-tip Mark Ellis