Monday, April 20, 2020

Take My Oil, Please!

In a time of weirdness and unprecedented events, this is a whole different level of weirdness. Oil futures were priced under zero. In other words, negative prices.

From Yahoo! Finance....

Stock market news live updates: Stocks fall, oil crashes into negative territory as energy demand concerns flare

Stock fell, tracking declines in oil prices as concerns over weak energy demand in an oversupplied market built up even further.

The May contract for U.S. West Texas intermediate crude oil (CL=F), which expires on Tuesday, erased all value and dropped below zero for the first time in history. The June contract for the commodity (CLM20.NYM) also sank sharply, but held above $20 per barrel Monday afternoon.

This doesn't mean that gas stations will pay you to haul gas away but it is a significant event reflecting the glut of supply and the plummeting demand. Nations dependent on oil, like the Middle Eastern oil producers, Russia and Venezuela, are going to be suffering mightily. When hundreds of millions of people in the developed world suddenly stop driving to work or vacation or the mall, we don't need all of that oil. Add in the virtual shutdown of the airline industry and you have a serious problem in the oil business.

Things are weird and only getting weirder.

1 comment:

  1. Please put your tray tables up, and your seatback in the full upright position . . . !