For the first time in history, the price of US crude oil plummets to the lowest price imaginable, which is below $0. Crude oil which is set to be delivered in the month of May for the U.S. benchmark crude plunged to minus $37.63 a barrel on Monday. It dropped by almost Three Hundred Percent (300%) for it to possibly hit negative.
Since the US crude prices are trading in negative territory, this could mean that oil producers would be paying their buyers to take oil off their tanks, ships, and pipelines. However, it is still unclear whether or not this dramatic drop in price will translate to consumers as an opportunity to buy gasoline at a much cheaper price since there still is a coronavirus pandemic.
According to a news published by the ABS-CBN News just today, the traders have already hired vessels which they can fill with their excess oil. This leaves a record of One Hundred Sixty Million (160, 000, 000) barrels of crude oil sitting in tankers all over the world.
“It’s like trying to explain something that is unprecedented and seemingly unreal,” said the oil markets analyst at Rystad Energy, Louise Dickson. “Pricey shut-ins or even bankruptcies could now be cheaper for some operators, instead of paying tens of dollars to get rid of what they produce.”
What drove the oil price down?
The still ongoing COVID-19 pandemic which has already caused dread, suffering and even death to many people worldwide also plays a big role in the making of such an unimaginable twist in the oil price. Quarantines, lockdowns, and social distancing across the globe due to the pandemic have driven people all over the world to stay within the walls of their home most of the time. This refrains billions of people globally both from short and long-distance traveling, thus resulting in the drying demand for crude oil.
What do you think about this shocking news?
Did not see this coming? Well, neither did most of us. Share your thoughts with us in the comment section below.