- This situation arises due to less market demand.
- There is a shortage of space for storing crude oil in the US, so prices are expected to decrease further.
Crude oil prices in the US reached minus on Monday. It happened for the first time in history. US West Texas Intermediate (WTI) crude for May delivery slipped to minus $ 37.63 a barrel. However, Tuesday trading saw a recovery of $ 1.10 per barrel.
Demand low due to Corona crisis, the storage problem
The price dropped due to a sharp decrease in demand for crude oil due to the Corona crisis. There is also a problem with storage in the US due to a lack of demand. According to Ristad Energy chief Björnar Tonhaugen, “The oil supply has started to fall due to the problem of a global supply shortage.” The contract for May delivery expires on Tuesday. However, business deals are not moving forward.
Difficulty in storing oil also
This situation has arisen due to reduced market demand due to Corona and due to its excessive storage in the US. The situation at present is that there is a shortage of space for storing crude oil in America. In such a situation, prices are expected to decrease further.
Tuesday is the last day of the deal for the May supply. This was the last opportunity for oil traders to take supplies by paying prices. However, due to low demand, traders are not showing interest in buying it. Along with this, they are also facing difficulties in storage. Traders possessing crude oil are now asking customers to buy it. They are also offering $ 3.70 per dollar to buyers on behalf of these merchants. This is called the price of crude oil going down to zero dollars per barrel.