For the first time in the history of the world, oil prices have fallen to a negative level
Tuesday, April 21, 2020
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For the first time in the history of the world, oil prices have dropped to a negative level due to Corona's global outbreak of reduced oil consumption and increased production.
This means that oil companies are paying buyers themselves for the risk of oil storage facilities and the risk of flooding in May.
Worldwide lockdown due to corona virus outbreak has led to a significant drop in global oil consumption and demand and the oil market has crashed. As a result, oil companies are hiring additional tankers to store extra oil for rent, and the price of US oil has fallen to a negative level.
According to West Texas Intermediate (WTI), the current quality of American oil companies, oil prices have fallen negatively to the lowest level of $ 37.63 a barrel. The sharp decline in the price of oil in the global market on Monday also became a technical basis as the oil trade is traded according to its future value and the contracts signed up to May are ending on Tuesday.
Therefore, oil companies want to hand over the oil purchased under these agreements to the respective countries so that they do not have to incur additional costs for storing it.
At the same time, crude oil prices for US oil companies, which were bought for June this year under the standard WTI, were lower and their trade in the global market on Monday was close to $ 20 a barrel.
While oil prices for Europe and the rest of the world, crude oil company Brent crude also saw a drop of 8.9% and its global market was lower than $ 26 a barrel.
The global oil industry is currently facing problems such as falling demand for oil and differences in oil production to reduce its production.
Earlier this month, OPEC member states and its allies agreed a deal to reduce global production by 10 percent.
The deal was the largest cut in oil production ever agreed to.
However, some experts believe that the cut in oil production was not high enough to make any difference to the industry.
"It doesn't take long for the global market to know that the OPEC countries' agreement with the current conditions will not be enough to balance the oil markets," says World Oil expert Stephen Innes.
According to analysis by BBC economic affairs correspondent Andrew Walker, OPEC countries and its allies, such as Russia, have already agreed to reduce oil production to a record extent.
Other countries, including the United States, have made business decisions to reduce oil production. But globally, the supply of crude oil is still high in the world and the problem is not just whether we can use it or not, but a major problem is its storage. Can we store this excess oil until the lockdown imposed by Corona from the world eases and there is no demand for oil products.
Oil reserves in the world and land are filling up fast and if this trend continues, oil prices are likely to come down even more.
The change in the global market depends on the demand for oil and will depend on what the situation is after the health crisis.
The supply of oil will be further reduced as private producers of oil will respond to these lower prices. But it is difficult to say whether this could have a significant impact on the oil market.
However, according to ANZ Bank, worries are growing that oil storage facilities in the United States will be completely abolished. In the United States, oil reserves have already increased 50 percent since March. '
This means that oil companies are paying buyers themselves for the risk of oil storage facilities and the risk of flooding in May.
Worldwide lockdown due to corona virus outbreak has led to a significant drop in global oil consumption and demand and the oil market has crashed. As a result, oil companies are hiring additional tankers to store extra oil for rent, and the price of US oil has fallen to a negative level.
According to West Texas Intermediate (WTI), the current quality of American oil companies, oil prices have fallen negatively to the lowest level of $ 37.63 a barrel. The sharp decline in the price of oil in the global market on Monday also became a technical basis as the oil trade is traded according to its future value and the contracts signed up to May are ending on Tuesday.
Therefore, oil companies want to hand over the oil purchased under these agreements to the respective countries so that they do not have to incur additional costs for storing it.
At the same time, crude oil prices for US oil companies, which were bought for June this year under the standard WTI, were lower and their trade in the global market on Monday was close to $ 20 a barrel.
While oil prices for Europe and the rest of the world, crude oil company Brent crude also saw a drop of 8.9% and its global market was lower than $ 26 a barrel.
The global oil industry is currently facing problems such as falling demand for oil and differences in oil production to reduce its production.
Earlier this month, OPEC member states and its allies agreed a deal to reduce global production by 10 percent.
The deal was the largest cut in oil production ever agreed to.
However, some experts believe that the cut in oil production was not high enough to make any difference to the industry.
"It doesn't take long for the global market to know that the OPEC countries' agreement with the current conditions will not be enough to balance the oil markets," says World Oil expert Stephen Innes.
According to analysis by BBC economic affairs correspondent Andrew Walker, OPEC countries and its allies, such as Russia, have already agreed to reduce oil production to a record extent.
Other countries, including the United States, have made business decisions to reduce oil production. But globally, the supply of crude oil is still high in the world and the problem is not just whether we can use it or not, but a major problem is its storage. Can we store this excess oil until the lockdown imposed by Corona from the world eases and there is no demand for oil products.
Oil reserves in the world and land are filling up fast and if this trend continues, oil prices are likely to come down even more.
The change in the global market depends on the demand for oil and will depend on what the situation is after the health crisis.
The supply of oil will be further reduced as private producers of oil will respond to these lower prices. But it is difficult to say whether this could have a significant impact on the oil market.
However, according to ANZ Bank, worries are growing that oil storage facilities in the United States will be completely abolished. In the United States, oil reserves have already increased 50 percent since March. '
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