Oil prices in the US briefly dipped into negative territory, meaning that buyers were being paid up to 40.32 dollars to take delivery of oil. Demand for oil has dried up as international economies shut down to slow the spread of coronavirus. This has meant that storage sites across the world have been filling up. Ian King explained the extraordinary scenes of yesterday’s oil crash does not mean the commodity is now worthless.
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Sky News host Ian King said: “Absolute extraordinary scenes. The price of oil has never dipped into negative before.”
He explained: “This does not mean that oil itself is a worthless commodity.
“If you look at June’s futures contract that is trading in positive territory.
“The WTI contracts for June, July and August are all in positive territory or be it, they are falling as well.
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Sky News’s Ian King said oil isn’t worthless (Image: SKY)
WTI is the most commonly used US standard for oil (Image: GETTY)
“It doesn’t mean the price of oil has no value whatsoever.”
On Monday, storage had become so scarce in Texas that producers were paying buyers to take May deliveries of West Texas Intermediate (WTI) oil off their hands.
WTI is the most commonly used US standard for oil.
Rachel Winter at Killik & Co, an investment company said: “We’ve had too much supply and too little demand for an extended period of time, and all of the oil storage capacity is currently in use.
Storage sites across the world have been filling up (Image: GETTY)
“Nobody wants to take delivery of oil next month because there’s nowhere to store it, so the price has dropped below zero.”
It comes as Government figures published on Tuesday show that fuel prices have fallen for 12 consecutive weeks.
The average price of petrol at UK forecourts is £1.09 per litre, which is the lowest since May 2016.
Diesel drivers are typically being charged £1.16 per litre to fill up. The last time it was that cheap was July 2017.
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Oil prices in the US briefly dipped into negative territory (Image: GETTY)
The number of motorists who can take advantage of the cheaper fuel is limited however, as the Government has ordered people to only go outside for food, health reasons or to commute if they cannot work from home.
Department for Transport figures show that road traffic is around two-thirds lower than normal.
Howard Cox, founder of FairFuelUK, said the average prices for litres of petrol and diesel should be 98p and 106p respectively, but they are around 10p higher.
Mr Cox claimed that even before Monday’s oil price collapse, the UK’s fuel supply chain had “dishonestly held back” falls in wholesale costs which took place last month.