The cost of futures for WTI US crude oil for delivery in May returned to a positive value, but later became negative again, according to trading data.
As of 08:17 Moscow time, the price of May futures for WTI rose to $ 1.65 per barrel, and the cost of June futures for North Sea Brent crude oil declined to $ 25.32 per barrel.
However, by 10:42 Moscow time, the price of May futures for WTI oil again became negative, reaching minus $ 4.53 per barrel.
At the same time, by 10:55, the price of Brent crude oil fell by more than 10%, to $ 22.97 per barrel.
On the eve of the first time in history, the price of WTI crude oil fell to negative indicators. At the close of trading on the New York Mercantile Exchange (NYMEX), the price stopped at minus $ 37.63 per barrel.
Urals, which is traded by Russian companies, followed the American WTI. Its estimated price in the evening of April 20 reached minus $ 2 per barrel, which is 112.7% less than the last price on April 19, amounting to $ 15.75.
The cause of the collapse in world oil prices was the coronavirus pandemic, due to which countries were forced to introduce restrictive measures for citizens and enterprises, as well as the collapse of the OPEC + deal.
Recall that in March Brent crude fell below $ 22 per barrel, and WTI fell below $ 20. After the approval of a new OPEC + deal, which provides for serious reduction in production volumes, quotes rose briefly.
- Reuters
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The deputy chairman of the Security Council, Dmitry Medvedev, commenting on the current situation, expressed the view that the oil market may begin to function differently.
“This situation should be the subject of the most careful analysis, since it undermines the recovery of the global economy. It is likely that the principles of oil trading may change in the future, for example, taking into account the experience of concluding long-term energy contracts using the take or pay principle, ”Medvedev wrote on his Facebook page.
He also believes that what happened on April 20 with futures contracts resembles a cartel conspiracy.
RISI expert, Ph.D. in Economics, Mikhail Belyaev, in a conversation with RT, noted that in order to analyze the situation, it is important to understand how oil prices are priced, since a very large part of oil prices is formed on the basis of futures, that is, contracts that imply future oil deliveries at certain prices.
“Some of them (the so-called supply contracts) involve the delivery of physical volumes of oil, while the other part is concluded in case of price changes, insures against their fluctuations - this is a purely paper price in order to balance the market. This mechanism works very well when there is real oil supply, ”the expert explained.
According to Belyaev, in the current situation, oil consumption fell due to the fact that coronavirus slowed down the development of production in the world. However, he is confident that those involved in the real economy and real oil supplies can expect that "in the very near future, prices will even out and go up." According to him, what happened is a temporary exchange mechanism, so in this case "there is no disaster."
“Of course, no high values, pre-pandemic, have been reached, but at decent levels, at which it is already possible to conduct normal economic activity, we will see them and see them soon enough,” concluded Belyaev.
Analyst of Finam Group of Companies Aleksey Kalachev called the current situation a “classic exchange corner”.
“There was practically no one to close, sell the contract in order to get the calculation, so the price fell into the negative area. This is a curiosity that is unlikely to happen again, players will learn to circumvent these situations. Another situation with Russian oil in European ports. The fact is that when the possibilities for storing oil are already exhausted (for both oil and oil products), as we see, we suddenly began to drop wholesale prices for fuel and gasoline. Neither production nor production can be immediately stopped or suspended, ”an RT analyst said.
He clarified that all this is a continuous cycle production, and preparatory work, that is, costly measures that require time, is necessary for its suspension.
“But there is practically nowhere to store and no one to sell. Something must be done immediately, proceed to reductions, to stops simply immediately. In order to get out of this situation later, ”he added.