For example, Wyoming Asphalt Sour was the first to set a negative price for oil. Its raw materials are mainly used for the production of bitumen.
In mid-March, Mercuria Energy Group Ltd was ready to pay 19 cents for each barrel of crude oil that would be taken out of its storage.
According to an analyst at ESAI Energy, the locations for the production of this oil are remote from seaports and difficult to transport to consumers. She also explained that where stores fill up quickly, prices could go negative.
The agency recalled that due to the economic downturn associated with the coronavirus pandemic, the demand for oil products is falling, and enterprises are reducing the volume of processing. This forces some sellers to reduce the cost.
In addition, some brands are trading below ten dollars per barrel: for example, Oklahoma Sour sells for 6.75 dollars per barrel, and Wyoming Sweet – for four dollars.
Countries OPEC in early March have failed to agree to amend any parameters of the agreement on the reduction of oil production or to extend the period of its validity.
Russia proposed to maintain the existing conditions, and Saudi Arabia – to further reduce production. Because of this, from April 1, production restrictions will cease to apply. Since the beginning of the year, oil prices have more than halved.
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