Negative price: US oil producers pay extra for consumers to buy it - ForumDaily
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Negative price: US oil producers pay extra for consumers to buy it

In one of the segments of the American market, oil prices became negative producers actually pay consumers to take the “black gold,” writes Bloomberg.

Photo: Shutterstock

In mid-March, a price of minus 19 cents per barrel was fixed for the producer of thick oil Wyoming Asphalt Sour, used mainly for the production of road bitumen. Trading House Mercuria Energy Group Ltd. since mid-March, it has been offering 19 cents for each barrel, which the producers will independently take out of its storage.

“This is crude oil, the extraction sites of which are remote from seaports and which simply have no buyers, says Elizabeth Murphy, an analyst at ESAI Energy. In places where the warehouse is quickly filling up, prices can go negative. Otherwise, production stops. ”

Varieties Brent and West Texas Intermediate benchmarks that are closely watched on Wall Street. Their price fluctuates around 20 dollars per barrel. But in the world of physical oil, where actual barrels of black gold change hands, producers are getting a lot less as demand falls due to coronavirus restrictions.

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Oil traders believe that other sources of oil are likely to see negative prices soon as well, since oil refineries are reducing the amount of oil they process, leaving a fraction extracted far from the sea without access to the pipeline.

Several varieties of crude oil in North America are already trading at a single-digit price as the market tries to force some production to close.

The Canadian Western Select benchmark, the benchmark for the gigantic oil industry in Canada, fell to $ 5,06 a barrel on Friday, March 27.

Gulf of Mexico Southern Green Canyon oil costs $ 11,51 per barrel; Oklahoma Sour goes for 5,75; Nebraska Intermediate 8, while Wyoming Sweet is priced at $ 3 a barrel.

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