FT News Briefing US oil prices plummet, Singapore oil trader scandal
Apr 21, 2020
US oil prices made history by plunging into negative territory, driven by a combination of decreased demand and a price war. The shocking implications for producers and the industry at large are explored. Additionally, the scandal surrounding Singapore oil trader Hin Leong Trading, which reported $800 million in hidden losses, raises serious questions about financial mismanagement. The ongoing challenges of the U.S. small business loan program and the UK's furlough scheme provide further context to the economic fallout.
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US Oil Price Crash
- US oil prices crashed into negative territory for the first time due to several factors.
- These included decreased demand from coronavirus and an oil price war between Saudi Arabia and Russia.
WTI Price Drop
- The May WTI contract expiration and perceived lack of storage caused the price drop.
- Few buyers wanted the contract, leading to more sellers and a dramatic price decrease.
Brent vs. WTI
- Brent Crude, the international benchmark, also fell, but not as drastically as WTI.
- This difference is due to several factors impacting the US oil benchmark.