Bloomberg reported that in the US market, demand for oil has fallen to such a level that some producers are willing to pay for unloading storage facilities.
For example, Wyoming Asphalt Sour was the first company to put a negative price on oil. Its raw materials are mainly used for the production of bitumen.
Mercuria Energy Group Ltd in mid-March was prepared to pay 19 cents for each barrel of crude oil that was removed from its storage facility.
According to an analyst at ESAI Energy, the oil production sites are far from seaports and it is difficult to transport it to consumers. She also explained that where storage is filled quickly, prices could go into negative territory.
The Agency recalled that due to the economic downturn associated with the coronavirus pandemic, the demand for petroleum products is also falling, and enterprises are reducing their processing volumes. This forces some sellers to reduce the cost.
In addition, some brands trade below ten dollars per barrel: for example, Oklahoma Sour is sold for $ 6.75 per barrel, and Wyoming Sweet is sold for $ 4.
OPEC+ countries in early March could not agree on changing the parameters of the agreement on reducing oil production, or on extending its validity. Russia offered to maintain the existing conditions, and Saudi Arabia-to further reduces production. Because of this, restrictions on production will cease to apply from April 1. In total, since the beginning of the year, oil prices have fallen by more than half.