U.S. crude oil futures collapsed below $0 on Monday for the first time in history, amid a coronavirus-induced supply glut, ending the day at a stunning minus $37.63 a barrel.
Desperate energy traders paid to get rid of oil. U.S. oil prices are trading in negative territory for the first time ever. As billions of people around the globe stay home, physical demand for crude has dried up, creating a global supply glut.
Traders have hired vessels just to anchor them and fill them with the excess oil. A record 160 million barrels is sitting in tankers around the world.
Prices have been pressured for weeks with the coronavirus outbreak hammering demand.
Saudi Arabia and Russia fought a price war and pumped more. The two sides agreed to cut supply by 9.7 million barrels per day (bpd), but that will not quickly reduce the global glut.
Weak global economic data also pressured prices.
U.S. President Donald Trump described the drop in the U.S. front-month crude price as a short-term issue caused by a “financial squeeze”. He said his administration would consider halting imports of oil from Saudi Arabia, the world’s biggest exporter.
Further, the WHO warned that any lifting of lockdowns to contain the spread of the novel coronavirus must be gradual. Also, if restrictions were to be relaxed too soon, there would be a resurgence of infections.
START TRADINGForex – US oil below $0 for the first time ever
Oil-linked currencies like the Canadian dollar were Tuesday’s worst-performing currencies.
Against the safe-haven the Japanese yen, the dollar was last trading down 0.2% at 107.39.
The Canadian dollar weakened to a near three-week low against its U.S. counterpart on Tuesday. Plunging oil prices overshadowed a stronger-than-expected increase for domestic retail sales in February. At 9:09 a.m. (1309 GMT), the loonie was trading 0.8% lower at 1.4230 to the greenback.
The euro was last down 0.4% at $1.0827 despite a survey showed that The mood among German investors improved in April.
Sterling fell to its lowest in almost two weeks on Tuesday against both the dollar and the euro. Investors sought safe haven currencies following a crash in oil prices. The change in global risk appetite drove the pound more than better-than-expected unemployment data for March.
Versus the dollar, the pound was down 0.93% at $1.2315, its lowest in 13 days. Versus the euro it was last down around half a percent, at 87.95 pence per euro.
Benchmark Brent and U.S. oil futures for June delivery plunged to around two-decade lows on Tuesday. This came a day after U.S. May futures sank below $0 for the first time in history.
Brent for June delivery fell to as low as $18.10, its lowest since November 2001. At 1200 GMT, it was down 18% at $20.98. The June contract for U.S. West Texas Intermediate (WTI) crude dropped 21% to $16.14, after hitting its lowest since 1999.
PLEASE NOTE The information above is not investment advice.
Sources: Reuters, Investing, CNN money