As the global number of those infected by the deadly coronavirus tops 595,000, some corners of the US have seen their oil market crude prices turning negative, Bloomberg reported.
Wyoming Asphalt Sour's oil price has decreased by 19 cents, meaning, according to Bloomberg, that Mercuria Energy Group Ltd., a trading house, is suggesting 19 cents per barrel for potential buyers.
Experts say the reason for this could be stored crude is increasing too quickly due to intensified production so that refiners reduce the amount of crude oil being processed. As it becomes increasingly problematic to quickly unload stored oil because of a lack of demand due to the lockdowns imposed amid the COVID-19 outbreak, sellers have reduced prices dramatically.
“These are landlocked crude with just no buyers,” said Elisabeth Murphy, an analyst at consultant ESAI Energy, cited by Bloomberg. “In areas where storage is filling up quickly, prices could go negative. Shut-ins are likely to happen by then.”
Analysts cited by Bloomberg say it is plausible that some markets could see prices go negative soon as well.
Early in March, the OPEC+ countries failed to reach an agreement on oil production cuts - a development that led to Riyadh raising production by 1.5 million barrels per day through the end of 2020. The coronavirus pandemic has accelerated the drop in the demand of fossil fuels, as air travel has fallen by an estimated 80 percent and people stay home except for urgent or essential travel.
