NewsGate Press Network

It was a nasty fire-sale of crude oil that pushed the price of ‘black gold’ to a negative of $ 40 per barrel on 20 April 2020.

The price of a barrel of West Texas Intermediate (WTI), the benchmark for US oil, fell as low as minus $37.63 a barrel.

In simple terms it means that traders were willing to give dollars to buyers to take physical control of the crude oil.

While the fundamentals of oil refining remains same as before, its the demand of by-products of crude oil that drives the cost per barrel.

Given the prevailing COVID19 pandemic situation across the globe, continued lockdowns in majority of G20 countries had abruptly brought down the energy consumption levels.

Demand of LPG, petrol, diesel, aviation jet fuel and other petrochemicals had fallen below 90 per cent of what it was during pre-lockdown period.

Last week OPEC along with Russia has agreed to cut production by 10 per cent. Experts say this decision came too late and is not enough to  arrest the free fall in crude prices.

Storage tanks are full and crude is not being pumped to the refineries. Reports had appeared at multiple locations in US and in Europe that companies are now using tanker lorries to store crude oil.

Many oil tankers are still at sea, full of crude oil.

All this is happening for the first time after WWII when in 1946 trading was introduced in crude oil business.