Why U.S. Oil Futures Are Now Rarely Negative: Storage Space Is Urgent, Buyers Are Discouraged
In the early hours of April 21, 2020, Beijing time, the WTI crude oil futures delivered by the New York Mercantile Exchange in May closed at -37.63 US dollars per barrel, a decrease of 305.97%. This is the first time in history that a crude oil futures trading price is negative, because the storage space is urgent and buyers are discouraged. Under the severe impact of the epidemic, the supply-demand relationship has become unbalanced. Saudi Arabian crude oil that has reached the United States cannot be unloaded from the tanker because there is no place to store it. Hillary Stevenson, director of oil markets at market intelligence firm Genscape, told the New York Times that “large amounts of inventories continue to grow at a record high rate and are expected to peak in May.” “Due to lack of demand and no reserves Oil space, the entire U.S. petroleum system actually has a backlog of crude oil from pipelines to refineries. "The Washington Post quoted Frank Velastro, senior consultant of the US Center for International Strategic Research." The market is worried about insufficient demand. It shows that we will not get rid of this downturn like the 'V' shape, it will be a global recession. " Analysts expressed particular concern about the growing and tight inventory in Cushing. In an interview with the Wall Street Journal, Helch Andre Martinson, senior oil market analyst at DNB Marketing Department, said that Cushing is the main hub of US crude oil trading, "every barrel of oil is running there."