 Home > News > Market Flash > Oil price may drop to below zero again

Oil price may drop to below zero again

 ECHEMI 2020-05-28

The collapse of West Texas Intermediate oil price below zero may repeat as Saudi Arabia and Russia may restart a new round of price war in the oil markets, Russian experts warn.

The WTI, also known as Texas light sweet, is a grade of crude oil used as a benchmark in oil pricing.

For the first time in history, the cost of May futures for the WTI crude dropped to minus $37.6 per barrel, causing panic in the market.

Russian experts predict a new collapse in the WTI oil price below zero, noting that the chances are low. However, they are not ruling out the possibility.

Experts said the collapse was partially triggered by a drop in oil demand and a lack of storage facilities, so a repeat is possible in the current market situation.

"That situation was related to financial instruments, not to filling the storage facilities, because even the oil that was purchased at a negative price is now stored somewhere. WTI and Brent trading is primarily paper trading, so the possibility of a negative price remains, although the risks are much smaller," Andrey Polishchuk, an analyst at Raiffeisen Bank, said.

Vasily Tanurkov, head of Analytical Credit Rating Agency's corporate rating group, believes that storage capacity was not the only factor that led to the negative price.

In many ways, the situation was affected by investors who, at that moment, dominated the stock market.

Timur Bayanov, senior personal broker for international markets, BCS Broker, also believes oil prices may again turn negative for various reasons.

The global market players are monitoring the amount of oil storage available, he said.

"However, there are other events that are unexpected but important, and can hastily lower the oil prices," said Bayanov, pointing out that the Chicago Mercantile Exchange, a global derivatives marketplace, had recently raised requirements for forward and June oil contracts.

Despite all these factors, the chances of a repeat of the situation with a negative price for the WTI crude oil are insignificant, as players and exchanges will try to prevent it, experts say.

"The chances are still there (of a negative price for the WTI), but they are small. The negative experience affected players and hedgers, and most of them had the opportunity to protect themselves from repetition and shift in advance to longer contracts if they did not expect to deal with deliveries in June," Alexei Kalachev, an analyst at Finam Holdings, a financial services company, said.

Experts said the oil market could be shaken due to a new round of price war.

Now, the oil price seems to be rising because of some kind of pause in this war, they said.

Alexander Gryaznov, department director of S&P Global Ratings in Russia, said the price war between Saudi Arabia and Russia on the global oil market may start again when the price returns to the level of $50-55 a barrel.

Oil prices plummeted in March after Russia and Saudi Arabia failed to negotiate oil production cuts. The former allies intended to ramp up production in April. Observers called it "the price war".

However, OPEC+, a group of oil producing nations made up of 14 OPEC members and 10 other non-OPEC members, managed to finalize the deal on oil production cuts in May-June at their extraordinary meeting on April 12.

According to S&P Global Ratings estimates, Brent oil prices will be at the level of $30 per barrel until the end of 2020 with a subsequent recovery to $50 per barrel in 2021.

Experts believe prices will be at $55 per barrel in 2022 and beyond that.

"The current pause in the price war is disadvantageous to both players, Saudi Arabia and Russia, to continue the price war. However, when the price returns to $50-55, I would not exclude that the struggle for markets will continue," Gryaznov said.

oil price

crude oil

industrial chemical

 Disclaimer: ECHEMI reserves the right of final explanation and revision for all the information.

Ningbo exporters eye trade boost

The world's first iron carrier cephalosporin drug is approved in the EU

Comment

Comment

You May Interested In

buy Top Quality Tirzepatide Powder With Consistent Purity Weight Loss CAS 2023788-19-2





Popular Tags

Daily Morning Brief

2026-08-05

BP profits more than double as Iran war sends oil prices soaring

TCC Group Favors London for European Unit IPO

Goldman Sachs-backed Attovia eyes $731.5 million valuation in upsized US IPO

Pfizer Beats Earnings Estimates, Targets $2.5 Billion in Additional Cost Cuts

Rio Tinto Signals No Rush to Revive Glencore Deal as Standstill Ends

View All

Trade Alert

Delivering the latest product trends and industry news straight to your inbox.
(We'll never share your email address with a third-party.)

Recommend Reading

Hot Searches: scoplomaine; where do i get retatrutide; rift chems; food emulsifier suppliers; trimethylamine market; best places to buy retatrutide; n boc l phenylalanine; ethylene vinyl acetate price; ammonium nitrate prills; trimethylamine; na 931 peptide for sale; penetane



Feedback & Suggestions

Send Message

Thank you for your feedback. If you require further assistance, please contact us by email at info@echemi.com or call us at +86-532-55729510.

Oil price may drop to below zero again

Ningbo exporters eye trade boost

The world's first iron carrier cephalosporin drug is approved in the EU

You May Interested In

Top Quality Tirzepatide Powder With Consistent Purity Weight Loss CAS 2023788-19-2

β-Nicotinamide Adenine Dinucleotide High Quality NAD+ CAS 53-84-9 Exclusive Production Factory CAS NO.53-84-9

Scyllo-Inositol 99% CAS No 488-59-5 Manufacturer

Tirzepatide Peptide China 99%Purity White Lyophilized powder 10vial/box

Lab Use Only Melanotan II MT-2 10mg Lyophilized Peptide Raw Material With Batch COA

High Quality TYRA-300 15 99% powder 2800223-30-5-Shaanxi Dideu Medichem Co.Ltd

Related News

Recommend Reading