The oil storage space has become a major global challenge as the US crude oil futures turned negative when it crashed below zero dollars for the first time in history on Monday, April 20, 2020.
The weak economic data from Germany and Japan have cast doubt on when the demand for crude will rebound. The lockdown in most of the economies around the globe has continued to have a negative impact on demand.
Meanwhile, Nairamterics had reported earlier when the US crude oil futures fell below $1 per barrel for the first time ever as demand for crude dried up. The U.S. crude futures for May delivery, the near-term contract, fell to their lowest level of more than 136% to negative $6.72 a barrel as traders fretted over the capacity of storage facilities both in the U.S. and abroad. Contracts for June delivery declined 12% to about $22 a barrel.
The global supply glut has persisted as the physical demand for crude oil has dried up and billions of people due to the lockdown stay at home as a precautionary measure to contain the spread of the coronavirus pandemic.
According to Reuters, the May US WTI contract dropped by $19.06 or 104.3%, to a discount of 79 cents a barrel as at 2.09 pm today (1.809 GMT) after it had hit an all-time low of -$1.43 a barrel. Brent crude went down by $1.85 to sell at $26.23 a barrel.
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This means that oil traders were willing to pay to get the crude oil off their hands ahead of the expiry of the contract for delivery in May
The investors were bailed out of the May contract ahead of the expiry date on Monday due to very low demand for the actual oil.
However, the outlook appears more promising as the June WTI contract is trading more actively at a much higher level at $21.6 per barrel which will be more than $23 difference when compared to what it was for May.
The low oil demand and unsold cargo has become a major problem for Nigeria. It was reported a few days ago that the Nigeria Bonny light crude sold for as low as $12 per barrel, as the country had to sell at a discount due to millions of barrels of unsold crude.