Oil Price Crash…One Day Wonder

Oil Price Crash…One Day Wonder Just when you thought you’d seen it all, an amazing day in the oil markets saw the price of US oil fall below zero to a price of minus US$37/bI, in other words you couldn’t even give oil way, you had to pay someone to take it from you. How did this happen? The answer is both fundamental and technical  Firstly, a bit of background, there are two major benchmark oil prices Brent and WTI  Brent is extracted from the North Sea and used to price oil from Europe and the Middle East WTI, or West Texas Intermediate, is used to price US oil, predominantly from Texas, Louisiana and North Dakota The price of both is usually close, any differential being storage and transportation cost with Brent typically a dollar or so pricier. The price of oil has collapsed from over US$60/bl to around US$25/bl this year as demand has totally collapsed whilst a price war between OPEC and Russia flooded the market with oil from February. This was only partly resolved by production cuts in a deal brokered between OPEC and non-OPEC on Easter Sunday but there is still way too much oil around [...]