Negative oil prices mean that the cost of transporting oil to refineries or storage has exceeded the value of the oil itself.
Although the trading price of oil in May was negative, it is still above $20 in June. The global benchmark Brent crude oil trading price is still trading at more than $25.
Crude oil prices closed at $18.27 a barrel on Friday, down more than 300% from todays lows. Novel coronavirus pneumonia and Russias recent cut in production agreement are not enough to cope with the sharp decline in demand for the global spread of the new crown pneumonia epidemic. Meanwhile, the surge in US stock prices hit record highs, and the problem of the exhaustion of oil storage facilities that will soon appear in the summer has further reduced the markets confidence in the share price of crude oil in recent months. In addition, the delivery date of crude oil futures in May is approaching, and when the futures contract moves to another month, the price usually jumps short.
According to data from the US Department of energy, the storage capacity of oil tanks in Cushing, Oklahoma alone is now 69%, up from 49% four weeks ago, and the US oil storage facilities are rapidly filling up. In this case, crude oil producers can only reduce production volume in the next few months and crude oil prices in recent months, reduce inventory and reduce production costs.