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Kelly Evans: Oil to -$100 a barrel?

CNBC's Kelly Evans

I'll keep this short: we've got Paul Sankey on right near the top of the show today, and if you think what happened to oil yesterday is crazy, he says even crazier is on the way. 

Sankey--Mizuho's oil and gas analyst--was among the first to warn us last month that crude could go negative. (In case you missed it, oil settled at roughly -$37 a barrel yesterday. Full headlines below.) Now, unlike Goldman's Jeff Currie, who said he thinks the oil market could transition into deficit (which is bullish for oil) as soon as June, Sankey says the oil market will get even worse next month. 

"Will we hit -$100 a barrel next month? Quite possibly," he warns. "If you had a stinking barrel of oil in your back yard, would you pay someone $100 to take it away? Yes, and you would probably be relieved you were not charged $300. That is the situation we are in."  

Sankey points to the fact that sixty different grades of U.S. crude yesterday posted prices from -$40 to -60 a barrel, per Plains All American. "This negative price was NOT a pure paper anomaly," he says. (The May WTI contract expires today, and that "rollover" to June has been blamed for yesterday's plunge.) 

Just imagine what will happen when the 20 Saudi ships with 40 million barrels of crude shows up!  

Sankey's -$100 call caught my attention for another reason, too; it's the perfect inverse of what happened during the great financial crisis of '08-09. On January 2, 2008, oil hit $100 a barrel for the first time. Energy was an outperformer that helped the U.S. economy weather the last downturn, even as consumers were pinched at the pump.  

Now, you have the energy sector potentially decimated and few consumers able to capture the benefit of cheaper gasoline. I just hope Sankey's right that this will help pave a sharp demand rebound in the second half of the year. All the more reason for those working on testing, treatments, vaccines, and safe reopening plans for coronavirus: it can't come soon enough. 

See you at 1 p.m! 


P.S. If you can't catch Sankey on the show today, "The Exchange" is now also a podcast! Click here to subscribe. 

Twitter: @KellyCNBC

Instagram: @realkellyevans