MOSCOW (Pakistan Point News / Sputnik - 21st April, 2020) The slump in the price of West Texas intermediate (WTI) crude for delivery in May, which fell to a negative value on Monday for the first time in history, was predictable, but will unlikely happen to the June and July futures, Muhammad Sahimi, an expert in petroleum engineering, told Sputnik.
Earlier on Monday, the price of May futures for WTI was trading down 292.67 percent at minus $35.2 per barrel, minutes earlier falling to minus $39.55 at the New York Mercantile Exchange (NYMEX).
"Given the sharp drop in the price of oil over the past several weeks as a result of Saudi Arabia oil war and the state of the global economy, it is not surprising that we are in negative territory. The question is, what will happen to June and July delivery," Sahimi, who serves as the professor of chemical engineering and materials science with the University of Southern California, said.
"They [the futures] have also decreased, but are not in negative territory, and I do not expect what happened today to be repeated," he said.
The COVID-19 crisis has shattered the US demand for oil with much of the nation subject to stay-at-home orders and roads nearly devoid of traffic. That, combined with a failure of the OPEC+ talks in April, has produced an unprecedented glut that exceeds storage capacity in many countries.
The outlook for the energy prices in the coming weeks does not look bright as they are still facing "downward pressure" from missing the two important months when a response to the effects of the pandemic should have been taken, International Energy Agency (IEA) Chief Fatih Birol said last week.
