CME Group preparing for possibility negative oil prices persist

  • CME Group preparing for possibility negative oil prices persist

CME Group preparing for possibility negative oil prices persist

June contracts for West Texas Intermediate crude went for $16.87 a barrel on the New York Mercantile Exchange on Thursday, rising 19 percent for the second straight day.

The worldwide standard Brent Crude was still trading at $26 (€24).

The crisis was worsened by a price war between Saudi Arabia and Russian Federation.

For the first time in history, U.S. oil prices ended in a negative as a supply glut forced traders to pay others to take the commodity.

However, prices have continued to fall as analysts say the cuts are not enough - and United States crude's collapse yesterday was triggered by worries that key storage facilities in Cushing, Oklahoma, are under pressure.

Earlier this month, exporting group OPEC and its partners agreed to cut output by nearly 10 million barrels a day from May to shore up virus-hit markets.

There were also signs USA output is beginning to fall - the Energy Information Administration said American crude production fell slightly to 12.2 million barrels per day last week.

Azerbaijan's Azeri-Chirag-Guneshli oil project will also have to cut output sharply from May to fulfill commitments under the deal, four sources told Reuters.

Trump's revelation that he had ordered the US Navy to sink Iranian patrol boats if threatened "boosted the possibility of renewed tension in the Middle East, a major oil producing region, which traders always translate to reductions in the region's production and exports if things escalate", said Bjornar Tonhaugen, head of oil markets at Rystad Energy, in a daily research note quoted by MarketWatch.

The Gulf is a major gateway for oil to reach global markets, and spikes in US-Iran tensions typically drive prices higher.

Even though prices are stabilising, they remain at multi-year lows and analysts say that demand needs to pick up again for them to truly recover.

The cost of June futures for Brent on London exchange ICE Futures at 7:15 GMT is $of 22.53 per barrel, which is 5.6% ($1.2 m) higher than the price at the close of the previous session.