In the US debt-ridden oil companies could default, risking more instability for the global economy When the West Texas Intermediate (WTI) oil price for May futures contracts – an agreement to buy or sell the commodity at a predetermined price at a specified future date – tumbled to -$38 a barrel, the Covid-19 economic crisis appeared to have taken a turn to the surreal. Traders, some of whom buy oil not to use but as a financial asset, were paying people to take oil from them because only a few had the capacity to take delivery in Cushing, Oklahoma, where storage space is virtually full.What happened in oil trading on Monday 20 April was an epiphenomenon conjured by oil as a financial commodity. Nobody thought that oil demand had permanently cratered, and indeed the WTI price for June delivery stayed just above $20 a barrel, as did the price of Brent crude, the benchmark for European, Middle Eastern and African oil. Continue reading…
Via: Low demand for oil isn't good news. It could cause a financial crisis | Helen Thompson
Categories: English News