[News] Coronavirus: Oil price at 18-year low as turmoil persists

[!meD]

 

The price of a barrel of Brent Crude - the UK benchmark for oil - has slipped below $20, its lowest level since 2002.

The close to 20% slump follows negative prices being recorded for a barrel of West Texas Intermediate (WTI), the benchmark for US oil.

Negative oil prices on Monday were a "quirk", says one market expert.

The price of US oil - which slumped to minus $37 a barrel at one point - was produced by a trading deadline and is now back to a positive figure.

"Yesterday's price action is best understood as a quirk or peculiarity of futures trading," said analyst James Trafford of Fidelity International.

He reckons the unprecedented price movement confirms that near-term demand is very weak.

"But it isn't cataclysmic," he said. "We don't see negative oil prices as a new normal, going forward."

 

 

As the delivery date approaches, these contracts need to be rolled over to the subsequent period.

The price of a barrel of West Texas Intermediate (WTI), the benchmark for US oil, fell into negative territory for the first time in history on Monday.

But that only related to the May contract, which was about to expire.

Traders holding the contract were unable to find buyers, because no one with the ability to take delivery wanted it.

"Nobody wants to take delivery of oil next month because there's nowhere to store it, so the price dropped below zero," explained Rachel Winter, associate investment director at Killik & C

 

Edited April 22, 2020 by -Dark
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