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Oil price plummets to historic levels

Historical. It is the lowest price registered in the international market. Commerce. It moves unstable due to the coronavirus.

NUEVA YORK. – The price of Texas intermediate oil entered into a free fall yesterday less than two hours after the market closed and thus plummeted 73.67%, to $ 4.81 a barrel, its lowest level in history, as that merchants remain concerned about a drop in demand due to the coronavirus pandemic.

Future contracts for crude oil for delivery in May, which expire tomorrow, subtracted $ 13.46 from Friday’s session, deepening the downward trend of the negotiations prior to the opening of the market and aimed at registering the worst day in history for the reference crude oil in the United States.

According to analysts, the collapse is due to fear of lack of capacity in the United States. to store crude oil in the midst of the abysmal cut in demand caused by the slowdown in the activity caused by the coronavirus.

“The intraday destruction of the Texas oil price is epic in scale and shows the great instability of the May 2020 contracts due to their expiration tomorrow and the fears that the storage may not materialize,” said analyst Louise Dickson, from Rystad Energy.

Unstable market
The market remains volatile despite the Organization of Petroleum Exporting Countries and its partners agreed in early April to reduce its production by 9.7 million barrels per day to offset that cut in demand linked to Covid-19, which investors they don’t seem to think it’s enough.

However, the most drastic event on the day was recorded in crude, where the price of a barrel of US crude for delivery in May sank to $ 37.63 in negative.

When 2020 began it was at $ 60 a barrel. Investors continue to pay $ 20.43 a barrel of US crude for June delivery, an amount analysts believe is closer to the “real” price of oil.

Meanwhile, the crude that will be delivered next month faces a tough problem: Investors are running out of place to store it, as storage warehouses are nearing their limit after demand has plummeted as factories, Automobiles and airplanes remain idle worldwide.

As Wall Street closed yesterday in red and its main indicator, the Dow Jones Industrials, lost 2.44% due to the collapse of the Texas oil price to negative territory, a visible effect of the impact of the Covid-19 pandemic.

Outlook

—1— Impact
European stocks posted a mixed result after the opening affected by the decline in US futures and a barrel of oil.
—2— Improvement
A return to normality, at least in economic activity, is expected to help oil prices.

 

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