Company Wyoming Asphalt Sour was the first to set a negative price of oil. Its raw materials are mainly used for bitumen production
DepositNovic / DepositPhotos oil Traders believe that the negative cost of oil will soon become an everyday event, as refineries reduce the amount of processed oil
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Bloomberg reported unexpected news. In the American market of oil ceased to be the price – demand has fallen to such a level that some producers are willing to pay to have the oil taken out from their vaults.
Company Wyoming Asphalt Sour was the first to set a negative price of oil. Its raw materials are mainly used for bitumen production.
Mercuria Energy Group Ltd in mid-March announced that it will pay 19 cents for each barrel of crude oil which will take out of her tank.
According to the analyst, ESAI Energy, the extraction of oil removed from the sea ports it is difficult to convey to consumers. She also explained that there where storages filled quickly, the prices can go in the negative.
although exchanges of oil grades Brent and WTI still holding above $ 20 per barrel (Brent may futures around $24, with WTI about $21), “the world’s physical oil” manufacturers are willing to greatly reduce prices, without waiting for demand will fall entirely due to the spread of coronavirus.
oil Traders believe that the negative cost of oil will soon become an everyday event, as refineries reduce the amount of processed oil.
Among the North American oil brands, whose prices are already close to zero – the canadian Western Select. On Friday the price fell to $5 per barrel. Brent Southern Green Canyon trading at $11 per barrel and Oklahoma Sour – $5,7, Wyoming Sweet – $3 per barrel.
Some countries have already imposed a moratorium on oil imports to only use raw materials mined in the state. Did, for example, Pakistan, the ban on 26 March, the imports of oil and fuel, because its storage is full.
the World is already on the verge of exhaustion of free space to store unclaimed oil. Somewhere this is already happening, and all it touches is in the next couple of months.
the Current falling demand and excess supply mean that oil reserves will increase by 1.8 billion barrels after the first half of 2020. I’m still only about 1.6 billion barrels of storage capacity. Crude oil will have nowhere to put.
as a result, the prey will not just reduce but to stop. The only question is when and by how much.
According to the analysis of the consulting company IHS, Markit, Russia, as one of the three largest global producers of oil, has the least amount of available storage is approximately eight days. These figures are based on the volume of production that can be saved if the export runs out. Saudi Arabia has in reserve for 18 days and the US for 30 days.
the Glut in the oil market is due not only to the pandemic of mers because of the combat which stops production and falling consumption, but also the beginning of the economic “war of attrition” between Saudi Arabia and Russia. It provoked a demonstrative RF output of OPEC transactions+ that signalled Moscow’s willingness to increase oil production. In the end, the same solutions were taken and other exporters. This has already led to a significant drop in oil prices, which Moscow more and more difficult to sell for other reasons. So, China started to refuse from hydrocarbons of Rosneft due to US sanctions against Russia.
Experts point out that even the first effects of the “oil war” for Russia are disastrous. But the Kremlin still deny it.
