U.S. oil price turns negative for first time in history

The price of Brent crude oil fell below 23 a barrel

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

Traders credited US President Donald Trump's threats to sink Iranian patrol boats in the Persian Gulf for the sharp increase in oil futures, just days after lack of storage and low demand drove the US benchmark WTI below zero. Its deflationary effect threatens to further cripple economies around the world already reeling from coronavirus-fueled lockdowns.

Commercial crude oil inventories in the USA rose by 15 million barrels, or 3%, to 518.6 million barrels for the week ending April 17, according to data released by the Energy Information Administration (EIA) on Wednesday.

Oil prices have been hit hard as the pandemic strangles demand due to lockdowns and travel restrictions, with USA crude falling into negative territory for the first time this week as storage space runs low.

Traders scrambled to unload positions ahead of the contract's expiration, contributing to the historic drop, experts noted.

The June contract ended down 16% to $20.43 a barrel.

Available storage space is dropping fast at the Cushing, Oklahoma, hub, where physical delivery of USA oil barrels bought in the futures market takes place.

Riyadh and Moscow drew a line under their dispute earlier this month, when they and other countries agreed to cut output by nearly 10 million barrels a day to boost virus-hit markets.

"Despite the OPEC+ alliance agreeing to an unprecedented cut in output, the physical market is awash with oil", it said, referring to the OPEC and non-OPEC partners.

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

But Kuwait's state news agency KUNA said on Thursday the OPEC producer would begin cutting supplies to global markets without waiting for the official start of the deal.

"We attribute the WTI price weakness to the imminent expiry of the May contract tomorrow and the low trading volume that comes with it", Giovanni Staunovo, a commodity analyst at UBS Global Wealth Management, told Xinhua on Monday.

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

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