U.S. oil prices went negative on Monday for the first time in history, as the market battled with a coronavirus-driven lack of demand, over-supply and limited storage options.
on Tuesday to $11.79 a barrel, versus more than 300 percent for the May contract. For Brent crude, the June contract had fallen below $20 a barrel by Tuesday morning—its lowest in 18 years and down more than 25 percent from the start of the day.
Goldman Sachs warned that the June WTI contract would be subject to the same downward pressure as May, adding that another slide could occur Tuesday as the May contract closes. Rystad Energy's Bjornar Tonhaugen said the physical oil market is"broken beyond recognition." He suggested that a lack of storage space drove traders to sell off the futures to avoid taking delivery of more oil. Looking ahead, the pain is likely to continue.
According to ING Economics,"negative prices could return for June" as storage is likely to be even more of a problem next month. Last month, analysts IHS Markit said storage space could be exceeded by 200 million barrels of oil by June. Though the prediction was made before the OPEC+ deal, observers have argued that the production cuts will not solve the storage issue alone.
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