By | Rachel Brooks
Staff | Telegraph Local
Above, trade indexes are discussed on CNBC broadcast.
Oil prices continue to slump as the crude storage shortage intensifies, citing Market Watch. Market Watch stated that on the CME exchange, oil will trade negatively as a May contract plunges below zero on the NYMEX. CME states that it has been testing negative trade options for oil futures if major energy prices fall below zero. The exchange operator made a note on April 8th that was quoted by MarketWatch as follows,
“CME Clearing has a tested plan to support the possibility of a negative options underlying and enable markets to continue to function normally.”
The Wall Street Journal reported that the June contract for West Texas Intermediate futures has dropped 10.8% to $22.34 a barrel. West Texas Intermediate is considered the benchmark for U.S. crude prices. Wall Street Journal also reported that Brent crude, the global benchmark, fell 5.6% to $26.51 per barrel.
The stress, however, falls on the May contract as for the first time in history a monthly contract falls to negative territory.
The Wall Street Journal had also reported that the historic deal that President Trump helped to engineer to curb global output. Wall Street Journal stated that the output won’t be enough to avert unprecedented pain for the domestic industry. Wall Street Journal stated that the United States president has urged OPEC to raise the price of oil as the price per barrel has dropped below $12 per barrel overnight.
Also on April 20, The Wall Street Journal reported that WTI for May slide to $-2 per barrel. This is the first time a monthly oil contract has trade negative in oil trade’s history.
The Financial Times reported that the U.S. oil history slump capped a volatile day of trading. West Texas Intermediate fell as low as $-2.80 citing the Financial Times record of events. Financial Times then compared West Texas Intermediate trading prices between 1983 to 2020. Comparing these graphs, the WTI trade the lowest it has since its inception in 1983. WTI was trading, as of April 20, at as little as 90 cents per barrel. In later moments of trading, the gains dropped by 95% by 95.1% for a record one-day drop. Oil traders continued to consider the potential collapse in the value of the oil demand that stems from coronavirus pandemic.
Earlier in the day, when the gains had fallen only by 85%, Reuters reported the record low demand. Storage space continues to fill up. Weak economic data also emerged from Germany and Japan, as a cloud of uncertainty looms over when fuel consumption will recover.
Bloomberg stated that the May contract has ended. Bloomberg stated that this crashing market price is the lowest ever recorded since indexing began in 1946. CME still discusses the possibility to trade negative.
Bloomberg quoted the managing director of RBC Capital Markets, Michael Tran’s comments on the situation as follows,
“There is little to prevent the physical market from the further acute downside path over the near term. Refiners are rejecting barrels at a historic pace and with U.S. storage levels sprinting to the brim, market forces will inflict further pain until either we hit rock bottom, or COVID clears, whichever comes first, but it looks like the former.”