Crude Oil Tanks (Updated)

Crude Oil Tanks (Updated)

(NewsReady.com) – April 20, 2020, marks another “first time in history” headline. With COVID-19 lockdowns keeping people at home, the demand for oil has plummeted. On this day, the industry’s American benchmark West Texas Intermediate (WTI) crude oil futures for May 2020 fell to approximately negative $37 per barrel. Yes, that’s $37 below zero.

“Futures” mean there are people who are contractually obligated to pay for oil shipments in May for $XX.XX per barrel from producers. They are now faced with minimal numbers of buyers because demand has plummeted. So they aren’t saddled with the expense of storing the oil, they’re willing to pay someone else to take over their position as the buyer and in doing so, the responsibility.

The crash caused a ripple effect across the financial markets with the Dow Jones, NASDAQ, and S&P 500 all closing lower. There could be a significant impact on banks and creditors as well, since another major industry may not have the wherewithal to repay their debts.

The novel coronavirus that from all indications originated in Wuhan, China, is wreaking havoc on an unprecedented scale in modern history. The cost in human lives and the world economies has been heavy, but it will eventually pass, and a state of equilibrium will return. Until then, let’s take the advice given to Great Britain during World War II: “keep calm and carry on.”

4/21/2020 Update: As things move into trading on June futures, the freefall seems to be continuing. When the markets opened today, the price was approximately $20 per barrel, but by mid-afternoon had dropped to just under $12.

Some experts see this trend continuing as the oil-producing countries continue operations regardless of the current glut in supply. It’s an odd strategy since one of the first things taught in Economics101 is low demand plus high supply equals low price.

~Daily News for Busy People!

Copyright 2020, NewsReady.com

2 COMMENTS

  1. Oil is as low, if not lower, than it was back in 1983…..so explain why the hell it is still so damn high at the pumps. Reg should be down at $1.00 gal and diesel should be at .75 a gal. Look back to oil per barrel in 83 and gas and diesel prices. The speculators are STILL laughing ALL THE WAY TO THE BANK. And in the meantime, “We the people”, are still paying the way and getting “Bent over a barrel”

  2. From what I understand about this article, is that there’s a huge over stock and continued high price for crude oil. This pandemic is teaching everyone that there’s a limit to what we have and what can be got. If the people begin to plan better and more frugal. Then we reason of evaluation we become smarter and more resilient. You all want this cleaner air ? Then restrict your driving habits. You want a better planet all around ? Then think about what you do now that makes it bad. Anyway, big oil is taking a big hit from this pandemic. They will have to comply with the demand of the people sooner than later.

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