How the oil price can slip to $0

And why petrol prices take longer to drop

An oil drilling facility in Texas. West Texas Intermediate (WTI) and Brent are the two most commonly used crude oil grades. The April 20 negative oil price refers to the WTI futures contract for May delivery. The prices of WTI for later months, spot
An oil drilling facility in Texas. West Texas Intermediate (WTI) and Brent are the two most commonly used crude oil grades. The April 20 negative oil price refers to the WTI futures contract for May delivery. The prices of WTI for later months, spot oil and Brent crude were above zero on that date due to differences in delivery obligations and trading methods. PHOTO: REUTERS
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The global oil market witnessed a doomsday scenario on April 20 when the price of US crude oil futures - which had never fallen below US$10 a barrel - plummeted to an unimaginable negative US$38 a barrel. The unprecedented fall of more than US$50 per barrel within a day sent a shockwave throughout the global markets.

The oil prices have since rebounded. Market sentiment, however, is still fragile and oil price continues a volatile trajectory.

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A version of this article appeared in the print edition of The Sunday Times on May 10, 2020, with the headline How the oil price can slip to $0. Subscribe