Crude oil prices fell yesterday, with a United States crude futures contract hitting its lowest level since 1998, as concerns that the US crude storage would soon be full and bleak economic data hit sentiment.
Global benchmark, Brent was down $1.62, or 5.8 per cent, at $26.46 a barrel, while the front-month May WTI contract fell $6.22, or 34 per cent, to $12.05 at the early trading. It later crashed to negative.
BBC reported that this implies that US oil producers are paying the buyers to take the products of their hands over fears that the storage capacity could run out in May.
Reuters reported that the volume of oil held in US storage, especially at the Cushing delivery point for the US West Texas Intermediate (WTI) contract in Oklahoma, is rising as refiners throttle back activity in the face of weak demand.
Crude oil in floating tanker storage at the high seas is also estimated at a record 160 million barrels. Weak global economic data also put pressure on prices.
The German economy is in severe recession and recovery is unlikely to be quick as coronavirus-related restrictions could stay in place for an extended period, analyst told Reuters.
However, Japanese exports declined the most in nearly four years in March as US-bound shipments, including cars, fell at their fastest rate since 2011.
Oil prices have collapsed by more than 60 per cent since January to levels well below the costs necessary for many shale drillers to break even, leading to drilling halts and drastic spending cuts.