Price of Oil Drops to Negative - the Lowest Its Been in 70 Years!
U.S. crude oil prices have taken a dramatic hit due to COVID-19 and lack of demand as prices fall below zero and keep plummeting. Oil barons will wish they kept it in the ground as the coronavirus pandemic has led the global economy to slam on the brakes, leading to the extremely sharp drop in demand which has created a massive oil glut and now, concerns have been raised about the lack of physical storage space for it.
The key U.S. oil benchmark, West Texas Intermediate, settled at a negative, ( - $37.67) today, on Monday the 20th of April 2020. This unheard of low price was the lowest oil price in history and was driven by a trading contract deadline, as traders desperately looked for buyers for the barrels of oil they normally hold in their books. However, buyers were no where to be found — even when the oil was being given away for free. So desperate traders, instead of the usual of paying to buy oil, were offering to pay as much as $37.63 to get someone to accept delivery of one barrel of oil!
The prices of other types of crude, without a vast approaching deadline, have not dropped as sharply, although in general, crude oil prices are very low and continue to fall. Brent, an international benchmark, is in the mid (-$20s) and fell more than 9% on Monday.
In early 2020, a barrel of West Texas Intermediate cost around $60, then prices dropped rapidly because of the coronavirus, ending up at around $18 a barrel on Friday, before Monday's big crash.
Oil-producing countries and companies are trying to reduce their output, but they can't keep pace with the extremely swift drop in global demand as the world economy comes to a halt.
This a new big issue as it is creating a huge oversupply of oil and raising concerns about where to physically store it all.
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