'The potential for prices to go lower is very likely' and markets could see a repeat of negative oil prices next month, analysts told CNBC.
crude for May delivery falling below zero for the first time to settle at negative $37.63 per barrel. The crash shows a stark picture of how demand has been obliterated by the coronavirus pandemic while storage tanks in the U.S. have run out of space — literally, companies are paying traders to take the oil off their hands.
"That storage is just as full for June, if not fuller, than it was for May. Already Cushing is 70% or 80% full, and that technically means it's closed for business. So we could easily see this play into the June contract pretty soon." The June contract for WTI was trading at $20.31 around 9 a.m. London time on Tuesday, down 18% from the previous day but at a price analysts say is still more reflective of the oil market writ large. The negative May contract — which later turned positive to surpass $2 but fell back to less than negative $3.
"There's an eight-week danger zone here between today and sometime in June — where between now and then, anybody who thinks oil has found a floor is playing with fire and trying to catch the famous falling knife, because it's almost impossible to call," he said.is at one of its widest levels ever, with Brent trading at a nearly two-decade low of $19.
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