Buy US crude, no need to pay, it’s free!

Buy US crude, no need to pay, it’s free!

The price of US crude oil has turned negative for the first time in history which means if you want to buy the producers will pay you as they have a serious problem of storages there is no demand.

For about four hours the price was in negative and now this morning at $1.10, approximately less than Rs 100 for 1 barrel which means 119 liter. So in simple terms, you can get 119 liter of crude in Rs 100.

@Courtsey: BBC

The oil pricing is a complexbusiness as mostly is indexed in two formats. They  WTI Price(US Crude) and Brent CrudePrice(North Sea) and OPEC( Gulf+ South America other nations).

Although the US crude price had gone negative and now in historic  $1 per barrel but the Brent crude oil prices are in around $35-$18. The Brent Crude control of  four-fifth of world crude market and India is the second big customer after China of that.

In US Demand for oil has all butdried up as lockdowns across the world have kept people inside As a result, oilfirms have resorted to renting tankers to store the surplus supply and that hasforced the price of US oil into negative territory.

In India, the US crude price drop shall have not much of effect as it imports crude oil from Gulf which is Brent price now hovering around $ 35. But for the Indian upstream companies like OIL and ONGC, this is pretty bad news as it is 30% cheaper to import the crude than produce through Navaratna companies like OIL and ONGC.

However, for Government of India, the low import price and the high market price has given the much-needed revenue in this hour of crisis as GST is a record low and the country is facing a serious shortage of fund.

The severe drop on Monday wasdriven in part by a technicality of the global oil market. Oil is traded on itsfuture price and May futures contracts are due to expire on Tuesday. Traderswere keen to offload those holdings to avoid having to take delivery of the oiland incur storage costs.

Meanwhile, Brent Crude – thebenchmark used by Europe and the rest of the world, which is already tradingbased on June contracts – was also weaker, down 8.9% at less than $26 a barrel.

The oil industry has beenstruggling with both tumbling demand and in-fighting among producers aboutreducing output.

Earlier this month, OPEC membersand its allies finally agreed a record deal to slash global output by about10%. The deal was the largest cut in oil production ever to have been agreed. Butmany analysts say the cuts were not big enough to make a difference.

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