Oil Price Collapse - Unprecedented negative rates
As it was warned by Bloomberg's article on March 19th which pointed out that in the commodities market anything is possible, even negative prices for oil. Today was a first as the U.S. WTI Crude Oil
With a loss of over 100% rates, the U.S.'s oil price is reaching record negative figures going as low as US$-37.63, causing a shock wave around the world markets. The reason behind this is the thought that the lack of demand for oil will cause supply reserves to remain full, unable to take on more supply. The temporary contraction of the global economic demand is causing this, which will have an estimated 20% of its global supply without owner as the prospect of diminished demand continues, pointing out that the agreed record deal of oil cuts from April 12 was insufficient.
As analysts around the world compare the negative prices that have been seen in the gas market, it is not a completely unprecedented in the commodities market, but this is oil. Markets like California are accustomed to negative rates due to the excess solar output in the state, normally leading to adjustment in the supply.
The truth is that no one is really expecting the demand of oil to disappear. The real problem is that we don't know until when we are going to be living in this situation of reduced demand. This being a main export to many economies, the month of April may become one of the worst months for the Oil Industry in the history.