On Tuesday, the US crude oil prices crashed to record lows, falling into the negative territory for the first time in history. May contract for WTI fell over 300% to trade at a negative $37.63.
Simply put, oil producers had to pay buyers to get the crude off their hands. The COVID-19 pandemic led to the situation of supply glut due to extremely low demand. This is a grim reminder of how the outbreak of Coronavirus is affecting the global fuel consumption & supply chains.
The storage tanks for WTI are becoming full due to oversupply. Notably, WTI stands for West Texas Intermediate. It is the benchmark for U.S. oil prices.
“The May crude oil contract is going out not with a whimper, but a primal scream,” said Daniel Yergin, a Pulitzer Prize-winning oil historian.
“Oil prices are at these low levels because of a complete stoppage to demand,” said Carl Larry, a performance director at Refinitiv.
“We’re not dealing with demand destruction at this point, we’re facing demand disappearance,” he added.
A Blessing in Disguise for India:
The current decline in global crude prices is an opportunity for India’s ISPR programme.
From April to November last year, India imported around 177.5 million metric tonnes of crude oil and petroleum products.
India must use the current low oil prices to build its storage capacity. It is worth mentioning that India is one of the biggest oil consumers worldwide. It imports over 80% of its oil needs from other countries.