On April 20, energy traders fled from the expiring May U.S. oil futures contract sending the contract deep into negative territory for the first time in history. Almost no buyers are willing to take delivery of oil barrels because there is no place to put the crude.
The price on the futures contract for West Texas crude that is due to expire on April 21 fell into negative territory – minus $37.63 a barrel. Sellers were actually paying buyers to take the stuff off their hands.
At the same time, U.S. stocks fell from a six-week high, with investors on edge as oil futures plunged to unprecedented levels and a spate of corporate earnings on tap. The S&P 500 halted a two-day gain and the Dow Jones Industrial Average fell more than 2%.
The developments on the oil market is a logical continuation of the ongoing oil war launched by Saudi Arabia in March. In April, OPEC+, including the kingdom, Russia and even the US, reached a deal to cut off the oil output. However, the deal did not put an end to the conflict and now the Saudis are attacking market by slashing the price of their oil rather than by pumping additional barrels.
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