Updated
April 21, 2020 15: 46: 47
Something remarkable happened overnight in the US — crude oil sellers actually started paying buyers to take the ‘black gold’ off their hands.
To be precise, traders selling West Texas Intermediate crude oil for delivery in May were willing to pay $US37.63 a barrel for someone to take it off their hands.
Reuters reports that it is the first time in history an oil futures contract has traded at a negative price.
Why did this extraordinary event occur?
Globally, oil prices have been crashing for weeks as COVID-19 disrupts international travel, which means airlines are using very little fuel; as well as car travel, meaning most households are using less fuel; and also industrial output, much of which uses fuel, oil or petrochemicals.
However, Bob McNally, the president of the Rapidan Energy Group and a former national security aide on energy matters for US president George W Bush, explained that it was only one specific contract where prices had gone negative so far.
“We’re talking about the price for the May futures contract, which is about to expire, and so this has not happened for the June or the other prices — they are above, still,