New Delhi (NVI): Oil prices rebounded after plunging below zero dollars a barrel for the first time in history today as coronavirus pandemic continues to affect global economies and markets across the world.
The US oil prices spiraled into negative for the first time ever due to a drastic fall in demand.
The oil market crashed as the producers have run out of space to store the oversupply of crude due to the coronavirus crisis, as hundreds of millions of people are asked to stay at home.
The US crude turned positive later today with prices edging over USD 0 per barrel. According to the latest reports, US West Texas Intermediate (WTI) crude for May delivery was up $38.73 at $1.10 a barrel by 0117 GMT after settling down at a discount of $37.63 a barrel in the previous session.
Earlier, prices of WTI had fallen to “minus” $40.32 a barrel in New York.
West Texas Intermediate (WTI) crude oil is a specific grade of crude oil and one of the main three benchmarks in oil pricing, along with Brent and Dubai Crude. It is the underlying commodity of the New York Mercantile Exchange’s (NYMEX) oil futures contract and is considered a high-quality oil that is easily refined, according to Investopedia website.
In a historic crash, oil futures opened at their lowest level since 1983, according to media reports.
The price of US crude oil crashed from USD 18 a barrel to USD -38 in a matter of hours, as rising stockpiles of crude threatened to overwhelm storage facilities and forced oil producers to pay buyers to take the barrels they could not store.
The major factor is a lag in manufacturing and other economic activity that requires oil.
The rapid market decline of recent weeks reached fever pitch on Monday as traders reached their last day to trade oil for delivery in May before the contracts expire.
The deadline triggered a collapse in prices as desperate oil traders with more crude than storage space were forced to take action.
