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If you were wondering how those negative crude oil prices in April played out in the physical market, now we know.
As the price of WTI fell below the $0 mark last month, Gulf Keystone Petroleum Ltd., a seller of Shaikan crude oil produced in northern Iraq, gave its oil away last month for free according to Bloomberg, as the price of its oil pumped from the Shaikan field traded more than $21 under Brent prices.
Brent traded at an average of $21.04 for the month of April.
The recipient of the month’s worth of free crude was the Kurdish regional government. It’s unclear if they had to make up the 4-cent difference per barrel—but at any rate, that $43,000 price tag for more than a million barrels of oil is still quite the bargain.
Gulf Keystone Petroleum produces 36,000 barrels a day of the Shaikan crude, according to the company’s website. Gulf Keystone made the Shaikan 1 discovery in 2009, before selling domestically in November 2010.
GKP’s full-year after tax profit for 2019 was $43.5 million.
Oil managed to stay out of the red in May, with the price of a Brent crude barrel on Thursday reaching over $35 per barrel, as the supply outlook has improved with significant OPEC cuts, and oil demand has improved since April. Brent topped $65 at the beginning of the year.
But oil prices are not expected to make a drastic recovery overnight. Lingering lockdowns in the world’s largest demand center, the United States, is stymying any recovery on prices, even as OPEC, Russia, and the United States have managed to cut production by millions and millions of barrels per day.
By Julianne Geiger for Oilprice.com
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Julianne Geiger is a veteran editor, writer and researcher for Oilprice.com, and a member of the Creative Professionals Networking Group.