The spot price of WTI crude oil dropped below $0 for the first time in history today. While a supply glut for crude oil exists, the true value of crude going forward is not near or below $0.

Today’s negative WTI spot price reflects an absence of further demand for May deliveries beyond what buyers have already purchased for May. The contract for May deliveries closes tomorrow.

June, July and August deliveries are trading around $22, $27 and $30, in-line with broader market views on demand. Saturation for May delivery resulted from (i) decreased demand for oil and refined products due to the COVID-10 pandemic, (ii) US domestic storage facilities nearing full capacity and (iii) the OPEC+ cuts not taking effect until May 1. 

While supply/demand issues persist globally, today’s WTI price below $0 is a timing aberration in our view.

“This is a unique moment in time—a perfect storm—but the world still has demand for crude oil. Today is an anomaly,” said Omar Samji, a partner in Shearman & Sterling’s Energy industry group.

As shocking as today is—tomorrow is another day.