![]() WTI oil prices were also dealing with the pending front-month contract expiration, with the May contract expiring at the end of the following day’s trading session. Marshall Steeves, energy markets analyst at IHS Markit, meanwhile, described the historic price plunge as the day the “bottom fell out” from oil, and said it came in the early days of the pandemic when demand was “decimated almost overnight due to the world-wide shutdowns that occurred from last March onward.” ![]() Based on the front month, prices have climbed nearly 31% year to date. Settling at $63.38 a barrel Monday on Nymex. ![]() Prices for WTI have rebounded since, with the May contract That makes another round of negative prices “unlikely,” he said. But a pandemic could happen again, he said, and if oil demand “goes to the red again, now oil producers, OPEC and governments have the experience to deal with it.” Overall, the negative prices were the result of the market “not being experienced and prepared for what was coming,” since pandemics don’t usually happen more than once per generation or less, said Tonhaugen. They “tried to offload their excess commitments, but nobody wanted to buy.: “When that bubble was about to break, panic took over and traders who couldn’t take on and store any more product they wouldn’t be able to sell,” he said. At the same time, “oil storage was filling up quickly, forcing oil tankers to become floating storage.” ![]() Producers did not want to halt production, hoping that the low prices wouldn’t last long and OPEC+ could not immediately agree on policy, said Tonhaugen. Negative prices were a result of “the market itself postponing an action plan, thinking that the problem will go away on its own,” he said. ““Oil prices not only hit rock bottom, but they also broke the rock.” ” - Bjornar Tonhaugen, Rystad Energy ![]()
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