Quick Answer: Will WTI Go Negative Again?

Who bought oil at negative prices?

BB Energy, an oil trading house based in London, bought 250,0000 barrels of oil when US prices turned negative on April 20, raking in a huge profit, Bloomberg reported on Thursday..

Can futures prices go negative?

No. The fact that a futures contract has a negative price does not mean the market is not functioning correctly. To the contrary, when supply and demand are that far out of equilibrium, the futures market would not be functioning correctly if it did not show a negative price.

What happens when oil goes negative?

If refineries ultimately don’t want oil, it has little to no value. If you have oil and nowhere to put it, it can have negative value. Absent a sharp demand return, production will need to be reduced more rapidly than what’s happening now.

What does negative crude oil mean?

You probably have nowhere to put it! With time short, you need to get out of that contract now so you don’t have to deal with an actual barrel full of oil come May. Negative prices mean you are actually paying the person with the oil to not give you the oil.

What is negative price for oil?

According to Yaw Yan Chong, director, oil research at Refinitiv negative price means that producers are willing to pay a certain amount of money, $37.63 per barrel at Monday’s close, to have the oil taken away from them, indicating that the excess supplies have exceeded the capacity to store them.

What is the lowest oil price ever?

Oil hit $0.01 a barrel before falling to as low as negative $40 and eventually settling at negative $37.63, the lowest level recorded since the New York Mercantile Exchange began trading oil futures in 1983.

Why the crude oil prices are falling?

The dramatic drop in oil prices in 2014 has been attributed to lower demand for oil in Europe and China, coupled with a steady supply of oil from OPEC. 4 The excess supply of oil caused oil prices to fall sharply. While supply and demand impact oil prices, it is actually oil futures that set the price of oil.

Why did WTI go negative?

HOUSTON – A perfect storm of weak demand, unbridled production by warring producers, and an exhaustion of storage capacity drove West Texas Intermediate crude to a negative price for the first time in history, closing at -$37.63/bbl.

When did WTI go negative?

20 April 2020On 20 April 2020, the May contract for West Texas Intermediate (WTI) oil delivery fell into negative territory, closing at -$37.63 on the NASDAQ stock exchange.

Why did oil drop today?

Oil prices continued to drop on Monday amid a resurgence of the coronavirus and renewed fears of lockdown measures that have the potential to quash global demand.