• 2 minutes California to ban gasoline for lawn mowers, chain saws, leaf blowers, off road equipment, etc.
  • 6 minutes China and India are both needing more coal and prices are now extremely high. They need maximum fossil fuel.
  • 11 minutes Europeans and Americans are beginning to see the results of depending on renewables.
  • 15 hours Monday 9/13 - "High Natural Gas Prices Today Will Send U.S. Production Soaring Next Year" by Irina Slav
  • 1 day "A Very Predictable Global Energy Crisis" by Irina Slav --- MUST READ
  • 4 hours Putin and Xi have decided not to attend the Climate Summit in Glasgow
  • 2 mins The Climate Scare Stories Began With Far Left Ideology Per GreenPeace Co-Founder
  • 17 hours Two Good and Plausible Ideas about Saving Water and Redirecting it to Where it is Needed.
  • 2 days Did China cherry-pick the factors that affected the economic slow-down?
  • 1 day "Here is The Hidden $150 Trillion Agenda Behind The "Crusade" Against Climate Change" - Zero Hedge re: Bank of America REPORT
  • 1 day Are you aware of Oil Price short videos on our energy topics?
  • 2 days Is China Rising or Falling? Has it Enraged the World and Lost its Way? How is their Economy Doing?
  • 2 days NordStream2

Breaking News:

California Gasoline Prices Are Spiking

Oil Producers Insist On 'No Zero Price' Contracts

Following the unprecedented market carnage that saw US benchmark prices drop below zero last week, producers selling crude oil to Asian customers have started to add a new clause in their contracts under which the cost of their oil will not go below $0.00 a barrel in any circumstance, Reuters reported on Thursday, quoting numerous sources.

The price of WTI Crude May futures slumped to as low as -$37 a barrel early last week, after crashing by more than 300% last Monday, a day before the WTI Crude May contract expired, as traders rushed for the exit to avoid owning physical barrels of oil for delivery in May. 

The negative price of oil—an industry first in the unprecedented demand collapse and oil glut—spooked sellers of oil into Asia, who started to insist on the ‘no zero oil price’ in their contracts, according to Reuters’ sources. Alongside the slump of the WTI Crude futures into negative territory, some grades sold in Asia were being priced in the low teens because of the heavy discounts and the crashing demand. 

Most buyers in Asia have accepted the ‘no zero price’ clause, which aims to protect sellers from having to pay buyers to take their oil, Reuters’ sources said. 

The gist of the new clause in contracts is that the price of oil cannot be lower than $0.00 “in any circumstance,” with a buyer at an Asian refinery confirming to Reuters that there was a new clause that stipulates the minimum price of $0.00 or $1.00 per barrel. 

“No one ever expected prices to go negative!” one of the sources, who works with an oil producer, told Reuters. 

Currently, most of those clauses are mostly applied to condensate—ultra-light crude—sold in Asia, as condensate is much cheaper than heavier grades and is not in high demand, according to Reuters sources. 

The fact that oil producers now include legal clauses to protect themselves against negative oil prices speaks volumes of the current market conditions of enormous oversupply amid collapsing demand.  

By Tsvetana Paraskova for Oilprice.com

More Top Reads From Oilprice.com:

Join the discussion | Back to homepage

Leave a comment

Leave a comment

EXXON Mobil -0.35
Open57.81 Trading Vol.6.96M Previous Vol.241.7B
BUY 57.15
Sell 57.00
Oilprice - The No. 1 Source for Oil & Energy News