The situation with the fall in the value of may WTI oil futures will not significantly affect the Russian ruble. This was told to REN TV by Maxim Chirkov, associate Professor of the Department of political economy at the faculty of Economics of Lomonosov Moscow state University.
According to him, the situation when an oil supplier needs to pay for its oil to be taken away is not a long-term one. Chirkov reminded that oil is supplied not only through futures contracts. At the same time, the fundamental factors are working and prices will return to normal.
The expert noted that the fall in value to negative values will affect the Russian currency very limited, as against the background of the crisis, which is developing due to the spread of coronavirus infection, it is clear that the ruble does not react strongly to what is happening.
The expert also added that oil in Russia is sold at other price parameters, and any modern oil companies conclude contracts and sell oil at much higher prices, because in favorable periods they insure themselves against the risks of decline. Chirkov concluded that this situation should be considered “in a complex”.
The price of North American WTI oil for delivery in may fell to negative values. The price of may futures for WTI crude oil by the end of trading on the new York Mercantile exchange (NYMEX) on Monday, April 20, fell by almost 300%, falling to minus $37.63 per barrel.
The may contract for WTI expires on Tuesday. The June contract for WTI fell by $4.6 (18.3%) to $20.03 per barrel at the end of trading on Monday.
The sharp drop in demand for oil in the context of the coronavirus pandemic has led to the fact that the market is flooded with oil, and there is not enough storage capacity for it. In this regard, producers are forced to pay buyers to take the extracted oil from them.
Earlier in the day, WTI oil fell sharply. First, the price of this brand of oil reached the level of April 1, 1986 – $10 per barrel, and then for the first time in history fell below $8 and continued to fall. As a result, the price of WTI oil fell to $0, and after that it became negative.
At the same time, the price of Brent oil is gradually decreasing. It fell to $25.91 (22: 10 GMT) The last time Brent fell below $26 was on April 2.