Crude oil is selling for less than $10 a barrel across key North American hubs as the global demand shock from coronavirus leaves crude with nowhere to go.The coronavirus pandemic has hit demand so hard that as benchmark futures plunge to their lowest in 18 years, oil is backing up throughout the distribution system, raising the prospect that producers will need to shut in wells.
Some of the hardest-hit areas have been those thousands of miles from export terminals, which would provide the possibility of escape, either to foreign markets or onto tankers as floating storage.
In Europe, the price of crude oil traded during the session at around $22 a barrel.
Refiners across the US, including PBF Energy, Valero Energy, and Phillips 66, are slowing fuel production as restrictions on travel and work reduced fuel and jet fuel demand to a trickle.
North Atlantic Refining will be idling its 130,000-barrel-a-day refinery in Newfoundland, Canada, for two to five months due to the outbreak.
The market is groaning under the weight of this oversupply so much so that US midstream operators such as Plains All American Pipelines have asked their suppliers to reduce oil production because storage capacity is reaching its limits.
Bakken crude in Guernsey, Wyoming, sank to a record-low $3.18 a barrel on Monday, according to data compiled by Bloomberg, while Western Canadian Select in Hardisty, Alberta, was worth just $4.18.
Even oil in West Texas is as cheap as it has ever been.
West Texas Intermediate in Midland was $10.68, just above its all-time low from 1998. And its lower-quality counterpart, West Texas Sour, slid to a record $7.18, the lowest in data going back to 1988.
West Texas Intermediate Light (WTL) traded at around $7.50 a barrel below the WTI Midland benchmark yesterday, said traders, the equivalent of about $3 a barrel outright.
Including transportation costs from the wellhead, that would mean the very light crude is worth near-zero, if not negative, when it comes out of the ground.
Even oil that makes it to a dock isn’t immune from the price plunge, as refineries around the world slow down.