Oil prices have fallen sharply after an unprecedented collapse in the value of US oil that saw costs fall into negative territory for the first time.
Brent crude, the international benchmark, fell below $20 a barrel on Tuesday – a drop of more than 20% – as concerns grew that global storage space was running out.
Demand has collapsed because the disruption caused by the coronavirus crisis means there is a massive supply glut.
US benchmark West Texas Intermediate (WTI) futures contracts for May were priced at -$40 a barrel on Monday, meaning traders were actually being paid at least $40 to buy a barrel of oil.
It reflected the fact that holders of the contracts could be left with a load of oil and nowhere to store it.
Analysts said Brent turned sharply lower on Tuesday as the market realised that even sharp production cuts – ordered by the so-called Opec+ group of oil-producing nations from next month – would still mean far more oil would be pumped than is needed for a saturated market.
Contracts for June delivery Brent crude hit $18.10 on Tuesday – the lowest level since July 1999. It but later recovered a little but was still below $20 by the time markets closed.
Read more via OilPrice.com/ The Financial Times/Reuters
