- International oil price plunge Corona 19 impact
- Oil prices plummet in short supply of crude oil storage
It marked its first negative in history as international oil prices tumbled.
The three major indexes of the New York stock market also fell.
On Monday, West Texas crude for May delivery closed at minus $37.63.
It is the lowest price since the New York Mercantile Exchange traded crude oil in 1983.
The negative international oil prices mean that crude oil producers have to put money on their crude oil sales, meaning there is no demand for crude oil.
The incident occurred as the demand for crude oil plummeted and the maturity of futures overlapped with Corona 19.
Futures contracts must take over real things after maturity.
The price has plummeted abnormally as futures investors chose a rollover to change to June rather than actually acquiring crude oil in May ahead of the May WTI due date (21).
In a situation where inventory is handed over and storage facilities are difficult to secure, no one can take crude oil, so the timing of the acquisition is slowing down.
The Energy Information Administration (EIA) said U.S. crude inventories rose by nearly 20 million barrels last week.
“In the situation of oversupply of crude oil, the facilities to store crude oil have been depleted, and some oil companies in the United States and Canada have to pay to sell crude oil,” CNN said.
Economist Reid Ianson said, “If you can find a place to store crude oil, you can make money.”
The three major New York stock indexes also fell due to a sharp drop in international oil prices.
The Dow Jones Industrial Average closed at 23,650.44, 2.5 percent lower than the previous day.
Standard & Poor’s (S&P) 500 fell 1.8 percent to 2,823.16 while the Nasdaq fell 1 percent to 8,560.73.