(AmericanProsperity.com) – On Monday afternoon, oil prices crashed into negative territory for the first time in history. At one point, West Texas Intermediate plunged 305% to a record low of -$37.63 per barrel. At 3:00 p.m. on Monday, it rebounded to -$20.31 per barrel before dropping again to -$36.15 by 4:00 p.m. At negative prices, producers will be paying buyers to take the excess oil inventory.
— OilPrice.com (@OilandEnergy) April 20, 2020
This unprecedented event was created by a drop in global demand due to COVID-19. Storage for oil is at capacity and crude oil is sitting on ships headed for refineries that don’t need it. Even though OPEC cut a historic agreement to cut production by 9.7 million barrels of oil per day beginning May 1, it may not be enough to counter the fall-off in demand coupled with the current excess in oil inventory.
There’s so much oil sitting around that even if shelter-in-place and social distancing protocols are lifted by May 1, the glut of oil is so severe it could last well into the third quarter. Even before the record drop in oil prices, the energy sector faced difficult decisions. Many energy companies are struggling to stay afloat as falling prices make them less competitive.
The one bright spot… if people can get out and travel again, it’ll be significantly cheaper at the pump.
~Here’s to Your Prosperity!
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