|Oil price fell to negative value [CNPC Network] News: On April 20, the New York Commodity Futures Exchange WTI May crude oil spot contract closed down $55.90 to $37.63 per barrel. This is the first time in history that international crude oil futures closed at a negative value,

Abstract: U.S. crude oil prices fell 37%, which is the first time that oil prices have fallen to negative values in history. At the same time, the price of Brent crude oil is also falling sharply. Why is this happening? Will

affect the price adjustment of domestic refined oil?

|Oil price falls into negative value

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[China National Oil Corporation Network] News: On April 20, the New York Commodity Futures Exchange WTI May crude oil spot contract closed down $55.90 to $37.63 per barrel. This is the first time in history that international crude oil futures closed at a negative value, with a drop of as high as 305.97%.

In the trading day, WTI crude oil fell to -40.31 USD per barrel at the lowest. WTI oil prices then rebounded, rebounding from $37.63 per barrel at the close to above $1 per barrel.

analysts pointed out that the sharp drop in U.S. oil has far exceeded the level 50 years ago. Moreover, this oil price indicator is FOB price, which means that excluding costs such as freight, the oil in many international oil fields is already free of charge.

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At the same time, Brent's June crude oil spot contract closed down $2.51 to $25.57 per barrel, a drop of 8.94%.

As of press time, the US WTI crude oil price was quoting $21.44 per barrel, up 4.9%; Brent crude oil price was quoting $38.6 per barrel, down 1.35%.

|Why did the sharp drop of 37%?

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First of all, the US oil fell to a negative value for the first time because US oil inventories continued to rise.

According to data from the U.S. Energy Information Administration, as of the week ending April 10, U.S. crude oil inventories increased by 19.248 million barrels compared with the previous week, far exceeding the expected 11.676 million barrels, and the previous value increased by 15.177 million barrels.

U.S. crude oil inventories have recorded growth for 12 consecutive weeks, with the increase continuing to hit record highs. The total crude oil inventories have hit the highest level since June 2017, while U.S. gasoline inventories are at a record high.

Chris Midgley, an analyst at S&P Global Platts Energy Information, said that Cushing is an inland city and the crude oil storage capacity is likely to be filled within 3 weeks. Once it is filled, it will be more difficult to physically deliver the WTI crude oil futures contract. In other words, U.S. oil prices are likely to fall further.

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Secondly, although OPEC has just reached an agreement to reduce production, it can control the oversupply to a certain extent. However, the speed of OPEC's production cuts is completely incomparable to the actual sharp decline in demand from countries around the world.

So in the case of insufficient demand and excessive supply, it will inevitably lead to a rapid decline in prices in the entire oil industry.

|What impact does it have on domestic oil prices?

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According to the rule of adjusting domestic oil prices for 10 working days, today is the fourth working day of this round of price adjustment cycle. On April 28, domestic oil prices will be adjusted again.

However, due to the sharp drop in international oil prices, the crude oil change rate has also been hovering at a negative value. According to Longzhong Information, as of the third working day, on April 20, the comprehensive change rate of crude oil was -7.4%, and the corresponding reduction is expected to be 245 yuan/ton.

However, there is a high probability that the oil price will not be adjusted in this round. Because according to the "Petroleum Price Management Measures", domestic refined oil prices are linked to the "floor price" with an average international crude oil price below US$40 per barrel, and domestic oil prices will not be adjusted.

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On April 15, the domestic refined oil price did not make adjustments because the average international crude oil price was lower than the "floor price" of US$40 per barrel.

So, on April 28, the adjustment of domestic refined oil prices is likely to be stranded.

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