It’s clearance season sale for crude oil in New York!

In an all-time low record in New York, oil prices have plunged to $15 a barrel, the lowest it has been in 21 years due to a supply and demand mismatch caused by the coronavirus.

Even the rates in the contracts dived as much as 22%which would amount up to $14.19 per barrel in the case of the West Texas Intermediate contract. This slump is said to be not caused since the May contract ends on Tuesday but it’s much due to the fact that because of the supply-demand mismatch caused mainly due to the Coronavirus pandemic which has resulted in an outburst of stockpiles of oil barrels in all significant parts like Oklahoma and Cushing; the pricing hub of America.

 

It’s just down the road for now, quite literally.

Now, as the WTI futures have had their demise too, a discount of just $9 a barrel has opened up to the June contract, and so has most of the trading. Buyers at Texas have offered “change” as low as $2 per barrel for some select oil brands giving birth to the probability of the idea of the oil companies paying people to get the crude oil off their hands.

 

Here are some important key points:

Crude oil stockpiles at Cushing and Oklahoma have risen to almost 55 million barrels since the start of 2020, where it is reported to have a storage capacity of 76 million as of September, last year.

The storage capacity of just 9.7 million barrels a day at OPEC+ is beginning to shrink and have become minuscule as compared to the others.

The butterfly effect of the Great Recession 2.0 will also have its impact on this stage as the lockdown will affect the sales of crude oil.

Commodities Head Fund Manager, Pierre Andurand (1) also has said that “there’s no limit to the downside to prices when inventories and pipelines are full,” meaning that this situation shows no signs of going uphill.

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Nishith Ramachandra
Nishith Ramachandra
Nishith is not famous, nor has he even looked at the stairs of fame at a large scale. He’s a normal CS engineering student but with some strange curiosity and a penchant for good articles. He actively cooks some wonderful dishes while stating that his inspiration to cook is the famous cook, Gordon Ramsey. He discovered his ability to fluently use words since he was in 7th grade and since then, he’s constantly kept at it. While writing is more of a mainstream pastime to him (other than engineering of course), he has a passion towards instrumental music as well, ranging from the tabla to the bass guitar. He’s quiet renowned within his educational sphere as being a person with a flair to churn out quiet good poems and paragraphs and that too on demand! He writes not so as to address a mass gathering (his orating skills take care of that aspect) but to address the individual reading the article, that’s something that the reader himself testifies to. His plans towards his future albeit are more aligned towards the business and management side, his skill as a writer are gonna leave some mark in its aspect to the world, or so he says.

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