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A Calgary energy analyst says the plunge by benchmark U.S. crude oil prices into negative territory for the first time on Monday is a short-term anomaly that likely won't have a lasting effect on Canadian producers.

Matt Murphy of Tudor Pickering Holt & Co. says the drop in West Texas Intermediate near-month contract prices below negative US$37 per barrel is due to unique circumstances.

Prices collapsed due to fear that storage tanks are growing dangerously close to full amid the coronavirus pandemic, which has severely curtailed global demand for crude oil and refined products.

WTI price for May delivery settled down US$55.90 Monday at negative US$37.63 per barrel. Those contracts are to expire on Tuesday.

Meanwhile, futures contracts for June delivery were down US$4.60 at US$20.43 per barrel.

Senior analyst Martin King of RBN Energy said storage at the Cushing, Okla., WTI trading hub is expected to hit capacity within four weeks.

"If you're a seller and you're desperate to get rid of the contract, you're willing to pay somebody to take it off your hands," he said.

"And if you're willing to buy the contract, you want to be compensated for what could be enormous risk and not being able to deliver those barrels or store those barrels. So you want to be paid to take that contract."

This report by The Canadian Press was first published April 20, 2020.

Since when does the National Observer give space to two energy analysts without much in the way of facts or comment ... and it's quite misleading to boot! They might as well have said, 'Of course these prices are short term. How else are we going to get investors to buy oil futures???'

really sad to see this cbc reprint. was hoping for a pushback on this oil lobby puffery piece. Who the hell want to invest in this crap when solar will give a better return for the future AND now?

To think that if any of the pipelines were completed, the supply might be even higher, and the prices could have dipped even further into the red.

But somehow, the Kenney still thinks the solution to the oversupply is even more supply...?