The prevailing value of Alaska North Slope crude oil hit negative $2.68 on Monday as oil markets were rocked by the coronavirus pandemic.
North Slope prices are posted one day late, and the Monday figures were released Tuesday morning. Industry observers said that negative price was an artifact of oil-trading markets and that barrels were unlikely to change hands at that level.
In an unusually early statement, the Alaska Department of Revenue said Tuesday night that prices that day had rebounded to $9.01 per barrel.
Dan Stickel, the top petroleum economist at the Alaska Department of Revenue, said earlier this week that negative prices were possible Tuesday and Wednesday before returning to the “low teens” by the end of the week. Oil producers in the Lower 48 have been struggling with a lack of crude-oil storage space, and the price of North Slope oil is based partially on Lower 48 prices.
Tom Stokes, director of the Alaska Division of Oil and Gas, said he does not expect Alaska producers to significantly reduce oil production in the near term, though production could fall later in the year if prices remain low.
He also said the opening of new oil fields could be slowed if companies cut spending to save money.
[Because of a high volume of comments requiring moderation, we are temporarily disabling comments on many of our articles so editors can focus on the coronavirus crisis and other coverage. We invite you to write a letter to the editor or reach out directly if you’d like to communicate with us about a particular article. Thanks.]