Remember that when crude oil prices have gone down the barrel below $ 0? After 5 years, prices are sliding again – but for a variety of reasons

Five years ago, the U.S. Crude oil futures came down to zero for the first time in history – an extraordinary fall that stunned global markets and underscores the weakness of physical oil trade. On April 20, 2020, the May contract for the West Texas Intermediate (WTI) settled at an unprecedented minus $ 37.63, as storage exits between the epidemic Lock Lock.

Today, when crude prices are far from negative, they are once again on the decline – even for very different reasons. This time the decline is going on with concerns over global economic downturn, trade tensions and geographical political uncertainties.

WTI futures fell 1.75% on Monday. Tariffs and weak global development have brace for economic consequences. The damage follows a short rally last week and, in the midst of new uncertainty over the demand for fuel, resonate the themes that last seen during the 2020 crisis.

https://x.com/nhaani/status/1914081096788332784

Same date, different drivers

In 2020, the total demand near the price collapse was driven by stable, kushing, storage limitations in Oklahoma and technical pressure of the finished contract. Traders were forced to open modes in a liquid market .This leading to a negative settlement price that denied traditional economics.

On the contrary, today’s solitary macro reflects the economic risk. Reuters’ voting last week in the U.S. About 50% of the recession was shown, while trade tensions and sluggish production data have raised a red flag for future usage. The world’s largest oil consumer is now facing headwinds rather than epidemic.

Still, the comparison is instructional. As like 2020, the spirit is fragile and the price moves are expanded by policy and status. The market may not return to the negative territory, but the shadow of the sub-zero is-the geographical political risks continue to the supply-demand balance in the cloud.

Policy, Production and Collection: Elevals of the past

Back in April 2020, infrastructure changes were forced to: U.S. ETFs like Oil Fund, close to the futures of the month, the OPEC+ announcement recorded, and the CME group moved to allow negative prices on the selection agreements. US The production in was 12.3 million barrels per day and it was slow to adjust it despite the fall of demand.

Today, OPEC+ is expected to increase the output by 411,000 barrels a day starting in May. Meanwhile, US-Iran nuclear negotiations have made progress, potentially paving the way to hit additional Iranian barrels in the market. Supply-side uncertainty continues the weight of values, though storage conditions are much less intense than 2020.

IDIA: Benefit with a limit

India, one of the top oil importers in the world, has again seen ease of crude prices in futures trade. On the multi -commodity exchange, the May agreement fell by Rs 101 to 5,378 barrels as traders reacted to weak global signals. Low prices provide some economic relief, helping to compress the current account deficit and ease inflation pressure.

However, like 2020, low prices are not required for higher prices if the demand status is weakened globally or shifts trade mobility. At that time, Indian refiners faced volume barrier and low throughput. Today, slow global growth and elevated freight costs can wet the pass-throw benefits again.

A market is still shocked

When the crash of 2020 was stimulated by extreme conditions, it exposed a reality that still holds: oil markets remain very sensitive to external shocks – if it is a contract ending, demand crisis or policy mistep. After five years, the crude is not in the crisis, but it is still sensitive.

The five-year anniversary of the sub-Zero crude price is higher than the historical scenic footnote-it is a reminder that the world’s most fluid, crude oil can also be resolved when fundamentals and logistics are collided.

Also read | Crude oil prices break down at 2021 levels amid fears of trade war. What is next?

(Disclaimer: The recommendations, suggestions, opinions and views given by experts are their own. This does not represent the views of the economic time)