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Oil Prices on US Markets Could Turn Negative Amid Coronavirus, Analysts Say

© REUTERS / Nick OxfordFILE PHOTO: A pump jack operates in front of a drilling rig at sunset in an oil field in Midland, Texas U.S. August 22, 2018. Picture taken August 22, 2018.
FILE PHOTO: A pump jack operates in front of a drilling rig at sunset in an oil field in Midland, Texas U.S. August 22, 2018. Picture taken August 22, 2018. - Sputnik International
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The historic price downturn comes as the coronavirus pandemic forces nations to impose lockdowns as a means of slowing the spread of the disease, resulting in a severely-reduced demand for petrochemical products worldwide.

As the global number of those infected by the deadly coronavirus tops 595,000, some corners of the US have seen their oil market crude prices turning negative, Bloomberg reported

Wyoming Asphalt Sour's oil price has decreased by 19 cents, meaning, according to Bloomberg, that Mercuria Energy Group Ltd., a trading house, is suggesting 19 cents per barrel for potential buyers.

Experts say the reason for this could be stored crude is increasing too quickly due to intensified production so that refiners reduce the amount of crude oil being processed. As it becomes increasingly problematic to quickly unload stored oil because of a lack of demand due to the lockdowns imposed amid the COVID-19 outbreak, sellers have reduced prices dramatically. 

“These are landlocked crude with just no buyers,” said Elisabeth Murphy, an analyst at consultant ESAI Energy, cited by Bloomberg. “In areas where storage is filling up quickly, prices could go negative. Shut-ins are likely to happen by then.”

Analysts cited by Bloomberg say it is plausible that some markets could see prices go negative soon as well. 

Early in March, the OPEC+ countries failed to reach an agreement on oil production cuts - a development that led to Riyadh raising production by 1.5 million barrels per day through the end of 2020. The coronavirus pandemic has accelerated the drop in the demand of fossil fuels, as air travel has fallen by an estimated 80 percent and people stay home except for urgent or essential travel.

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