Parul
As per news reports, the price of crude oil cratered to a historic low April 20 cheaper than bottled water amid the coronavirus pandemic and as traders sought to avoid owning crude with nowhere to store it.
The US crude for May delivery plummeted to a record low below $1.50 per barrel, a 90 per cent drop in just one day. The May delivery contract is close to expiring so its trading volume was light, which can exacerbate swings. Meanwhile, much of the plunge was chalked up to technical reasons.
However, the prices for deliveries even further into the future, which were seeing larger trading volumes also plunged. Demand for oil has collapsed so much that facilities for storing crude are nearly full.
On the other hand, the stocks have been slipping on Wall Street in afternoon trading, with the S&P 500 down 1.2 per cent, but the market’s most dramatic action by far was in oil, where benchmark U.S. crude for May delivery plummeted to negative $35.20, as of 2:30 pm, eastern time.
It was nearly $60 at the start of the year, before business-shutdown orders swept the world and idled factories, offices and automobiles.
In fact, the big oil producing companies have announced cutbacks in production in hopes of better balancing supplies with demand, but many analysts say it’s not enough.
