WTI was worth US$55.90 per barrel at the start of 2020, meaning it has fallen over 305% this year.

 

The price has only hit West Texas Intermediate, where May futures are based on physical delivery in Cushing, Oklahoma and with no place to store oil, prices dipped sharply as contracts rolled over overnight. 

 

With storage booked, they have to pay to store it.

 

"It's like trying to explain something that is unprecedented and seemingly unreal" Rystad oil markets analyst Louise Dickson said in a note. 

 

"Traders have been gobbling up cheap oil and pumping storage full, and now, in the case of WTI and Cushing, storage has reached a physical limit - we estimated earlier today that there was only 21 million barrels of free storage left," she wrote.

 

In separate analysis, ANZ Research noted WTI May futures contracts are due to expire on Tuesday, forcing any holders of that contract to accept physical delivery.

 

"With storage facilities filling up fast, particularly at the WTI pricing point, Cushing, there are fears that there will be nowhere to store it. Thus the contract closed the day in negative territory. The writing was on the wall, with physical crude trading in single digits," ANZ said. 

 

Wood Mackenzie's vice president Macro Oils Anne Louise Hittle said: "this issue is most intense for May WTI because oil demand is at its weakest, with full coronavirus containment measures in place across much of the US."

 

"With signs of a possible easing in containment measures against COVID-19, the next month's WTI expiry might not see such an intense selling pressure."

 

WTI June futures may clear up; they are currently priced at $21/bbl.

 

In the midterm this may also actually push up US natural gas prices, though given COVID-19 restrictions there is forecast to be less used, but as producers shut in oil production associated  gas production will also fall.

 

"We completely agree with the bullishness in the natural gas curve once to next winter, but before then, the picture is not as clear cut," Bespoke Weather Services told US media.

 

US gas prices have ventured into negative territory before when associated gas faced takeaway constraints thanks to pipeline constraints. 

 

Gas, however, can be flared or vented as a rule, which is what has been accounting for US basins' combined 1 billion cubic feet per day flaring and venting rates, according to information from both  Rystad and the US Energy Information Administration.

 

Though the US has been buying oil cheap for its Strategic Petroleum Reserve, established in the 1970s after the Middle East oil shocks of the decade, it's questionable how much of what is produced in WTI areas can make in the Gulf Coast, where petroleum is stored in four large caverns.

 

The market seems to agree.

 

"This is a North American storage congestion story, not a global one where we estimate some 1.5 billion barrels remaining in onshore storage capacity," RBC Capital Markets Michael Tran said. 

 

So far this morning, unlike the fall in the price of Brent which saw share prices for all in the energy sector including Australian east coast gas companies with little to no direct exposure to international oil prices fall up to 50% this year, the hardest hit have been those with onshore US acreage.

 

Australis is down over 10.17% today at 2.5c per share. In January its shares were worth 9.5c and in mid-2018 it was valued at over 40c per share.

 

Winchester Energy is unmoved at 1.9c per share. Fremont is down 25% today to 0.3cps share.

 

Whitebark Energy which has a Canadian oil project, is also down 20% given Western Canadian Select prices are also in the negative.

 

Freedom Oil and Gas went into administration last month.