Another great visualisation from DanClark93 to share on how the price of oil futures has changed.
But for the COVID-19 news, what’s happening to oil prices would be headlines for days/weeks. Ironically, COVID-19 has made what started as an oil price war into something even worse.
The price of a barrel of West Texas Intermediate (WTI), the benchmark for US oil, has fallen as low as minus $37.63 a barrel. Basically, there is so much supply and such a reduced level of demand that there is nowhere to store oil. So oil firms have resorted to renting tankers to store the surplus supply and the cost of doing that has forced the price of US oil into negative territory. The markets are also signalling that the Opec+ output reduction deal will not be enough to balance supply with current demand.
Don’t we want to use less oil?
Pollution and global warming has abated as road transportation (50% of global consumption) and aviation industry (8%) have slumped. Good for the environment but it is also another negative impact to the world’s economy (and financial system).
Distribution of oil demand in the OECD in 2017 by sector