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US Oil Trades as Low as Negative $40 a Barrel

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West Texas Intermediate, the US benchmark, traded as low as -$40.32 a barrel today.

The main delivery point for US oil, Cushing, Oklahoma has full storage. Storage tanks at Cushing will be full in May.

The crude oil tanks around Cushing have approximately 91 million barrels of storage capacity.

Many North American regions have fallen into the low single digits as buyers are unable to take delivery.

Marketwatch has a list of a few dozen US oil companies that are at risk of bankruptcy.

SOURCES- Financial Times, Market Watch
Written By Brian Wang, Nextbigfuture.com

43 thoughts on “US Oil Trades as Low as Negative $40 a Barrel”

  1. A $3000 gas card? That’s running around 10 years supply at the moment…

    Anyway, Acura dropped the S2000 and the 2nd generation NSX weighs as much as the first generation PLUS a Caterham, so there’s nothing good there any more.

  3. No it is an oversupply relative to the demand needed at this very moment.

    Of course this moment is a time when much of the world is living at home, not flying, and not moving as much cargo around on the seas.

    So it is this moment that is the oddity, not oil production.

  4. Tangentially I find it most interesting that oil/gas/diesel prices are at historic lows when gold is at a high.

    Price of dirt-farming gold is tied closely to the price of diesel. It is a good time to be pulling gold out of the ground.

  5. Right now my local Acura dealer is offering 90 days no payments on new cars. If they tossed in a $3,000 gas card…. well it would be time to get the wife a MDX.

  6. I wouldn’t say natural gas is doing just fine at $1.90 but I agree that gas transportation is doing fine. LNG volumes are slumping and flows are not at peaks but its better to own the pipe these days than own the reserves.

  7. I wouldn’t call oil worthless, It might be for May because people contracted for delivery that they can’t satisfy but production still exceeds 80% of previous demand levels. This is related to COVID effects on commodity trading. It is clear that the marginal producers will get squeezed out and that heavy crudes are approaching worthlessness.

  8. Just the ridiculous result of having to take delivery of a future’s contract when you are not in the oil business, you are just a speculator.

  9. We’re not near post-scarcity in (almost) anything. There’s a market failure in oil due to worldwide lockdowns. As soon as those are lifted, we’ll be back to the previous market dynamics.

  11. We should rethink our car usage, and plain usage, transportation will likely change, and so the demand for oil as well. Even if a corona cure gets there, it can be less then a year for the next chinese batt market flu spreads out globally.
    If no one tells China to keep hygienne strict on the markets the next one is likely, we had Sars, Mers, H2N2, etc etc…

    And what did China or the WHO do meanwhile.. ?
    They let out to the world their next hygienic problems.
    Its our own problem as well, any industrial production should not be continental, medical drugs or electronics should be produced everywhere globally, regulate the market (if we only had true leaders). Current monopoly is to risky, china doesnt have to declare a war, it can simply stop produce antibiotics while keeping their food markets, (they even warned to do that, in reaction to trump’s tweets) do we want that ?.

    It be good as well i think for companies that got bought up overseas, add some tax to prevent that. companies can get richer then countries, a stronger regulation for a webclicking generation.
    end of micro trading and regulate international (alibaba alike) trading, or get economical destroyed by it, let it be a lesson.

  12. Fracking wells generally don’t produce as much and run dry sooner. On the up side they can drill many wells and most if not all will produce.
    They just will be drilling less, and the production will fall a bit to better match demand.
    What we don’t want to do is pull back too far…that could lead to a shortage in 6 months.
    The only people “squandering” fuel are pickup truck owners, people with a lead foot, and those using very old vehicles. Pickups (light trucks) are incredibly inefficient: https://www.eia.gov/energyexplained/use-of-energy/transportation-in-depth.php
    (scroll to the bottom of the page). They use 31% of all transportation energy. And there are only about 55 million of them. There are vastly more cars. And of course there are other modes of transport as well.
    Trains are by far the best way to move cargo. They are roughly 6x more efficient than semi trucking. The more freight we can shift to rail the better. It would already be there, except FDR made it so rail workers get fat retirment checks distorting cost. https://en.wikipedia.org/wiki/Railroad_Retirement_Board

  14. “…the negative pricing will be chalked up to a weird one-off glitch, a confluence of historic firsts due to a price war, pandemic and temp downward economic plunge. The bizarre development will quickly be forgotten as traders move on to the June WTI contract…” besides fossil fuel demand will rebound robustly – SUVs and pick-ups will be ICE, especially in 3rd world countries, for decades, with increased vehicle purchases as no-one wants to depend on 100% transit and bikes going forward. Maybe buy but don’t drive. Oil will achieve a new floor of $40 by labour day with barely a footnote of this crazy to be found afterward.

  17. This is a localized issue, very temporary as well I would assume. This is also not affecting the price (much) of DELIVERED oil, so refiners are not getting this deal. Also nobody in Venezuela or Saudi Arabia is having this issue.

  19. But how does it not pull down the prices of the rest of the oil market?

    Also, I presume this is oil that is stored somewhere already – is this a case where oil storage companies are raking in a big profit by buying oil that’s already in their own storage and ‘taking delivery’ by letting it stay there?

    Or have those storage companies already leased that storage space to take oil coming in on tankers, and so this pricing is effectively paying the tankers to sit idle, holding oil? [Edit – hmm ok, so this is maybe specific to storage in OK, so maybe not tankers… 🙂 ]

    I never saw a straight answer on why oil can’t be injected back into nearly depleted wells for storage, if we’re really so short on storage that the only alternative is figuratively dumping it at a high negative price. Frackers routinely inject other fluids into wells – why not oil?

  20. I vaguely remember that, but I also vaguely remember it was stopped shortly after for some reason, I think congress objected?

  21. Well, they could always pump the oil back into the ground. Conventional oil fields get oil from permeable rock which should be able to hold oil again… which also means it could be recovered in the future.

  29. You’d think it would be a swell time to top off the strategic reserves but you know that won’t happen…

  30. So in layman’s terms ‘they’ are are trying to destroy the fracking industry. Can the frackers come from a different angle and start in a different place? Or has the damage been done? What is the cost adder for re-drilling to begin production again?

    Oil is a finite resource used for may different purposes. Granted it might have been persured at too rapid of rate, but to attempt to squander it is evil. It can do things no other product can do.

  31. Negative prices at the gas pumps? I think I’ll buy a HEMI and drive until my credit card is paid off.

  32. This isn’t the whole oil market. It’s the price of a fraction of the total where the futures contract holders got stuck without a chair in musical chairs e.g. they have to take physical delivery now and that’s what they pay not to have to. It’s one chair missing of maybe twenty total needed.

  33. just ask them too dump it in the sea they know how too do this.
    after the citys cleaned up when we stopped using fossil fuels the air in every major city cleaned up time for oil has past.

  34. Unless the “main delivery point” and “Storage tanks at Cushing” are two different things. Maybe the delivery point is a staging area that’s a choke point which slow feeds storage tanks at Cushing, everything backs up.

  35. The answer is it depends… a huge number of larger oil fields have purchasing agreements with the pipeline and or transport companies for that field/ asset cluster or how ever they handle it. In the last big dip lots of pipeline companies took it in the neck when prices dove so they changed contracts to volume based on a use it or lose it basis for many sellers meaning they have to pay to not use the pipeline making this an odd situation for them. Some smaller players don’t use the purchasing contracts so its going to hit others hard and others no so much. Then additionally some reservoirs could be damaged if shut in production might not come back as it was or at all so they have to weight their options there as well.

  37. Most of the oil is pressure fracked and if you switch off the hydraulic/nitrogen pumps the well gets clogged with spoil and it’s history. These wells only really work with pressure and flow, squeezing your kids juice box while sucking the straw at the same time. With nowhere to put the oil it’s negative as some companies have nothing to lose.
    Other oilfields that are not as deep or tough to work as west Texas, open the ground and the pressure will force it out.

  38. It can’t get much lower than the price of installing new storage facilities, so prices will stabilize soon…

  39. If the barrel price is negative because they don’t find anywhere to store it, can’t they stop pumping or the oil wells can’t never stop ?

  40. Regarding strategic oil reserves, does Congress even need to approve oil purchases that are negative?

  42. Brian, you need to pick one of these sentences and remove the other:

    1. The main delivery point for US oil, Cushing, Oklahoma has full storage.
    2. Storage tanks at Cushing will be full in May.

  43. So essentially worthless oil that nobody needs or wants. I don’t see any other delicate way to phrase it

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