US oil prices approaching negative territory again
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Over capacity and storage issues have prompted business analysts and oil experts to expect that the benchmark price for American crude oil could move back into negative territory. June contracts for West Texas oil (WTI) have gone down by 18% to 10 dollars per barrel in London dealings, according the Financial Time. The same benchmark had lost another 25% Monday.
The oil market has been the subject of significant swings in the past days, but last week WTI has gone down to a negative 40 dollars a barrel, the first time in history that this had happened. With most major oil consumers, such as airlines and cruise ships currently not in operation, demand has collapsed, prompting huge challenges for storage companies.
Robert Rennie, a market strategist based in Sydney, explained: “We are approaching [the limit of] physical storage capacity around the world and the point where floating capacity is also approaching its structural limits as well and that has a depressing effect.
Brent crude also registered losses in Asia, falling more than 4% to 19 dollars per barrel, the first time in over twenty years that the price of oil has gone down below $20 in the Eastern continent. However, financial markets appeared to have been adjusting or expecting such drops, as key indixes in Japan, China and South Korea remained stable.
