Oil Implodes

The big news today wasn’t from the stock market. Instead, it came from the oil pits. The demand for oil plunged. As a result, the price for oil dropped through the floor.

Actually, not just through the floor, but several inches into the ground.

Since supply and demand are out of whack, there’s tons of oil that needs to be stored but there’s no place to put it. As a result, no one wants to own it—and I mean no one! The price for the May futures contract for West Texas Intermediate actually went negative.

That’s not a typo. They literally were paying people to take oil. The lowest price I saw was minus $37.63 per barrel.

I have to point out that we’re talking about the May futures contract. The later months aren’t so dire. The difference is that the over-supply shouldn’t be a big problem later this year. But right now, it’s a big deal. We’ve actually run out of places to store oil and that’s why no one wants to touch it.

Posted by on April 20th, 2020 at 5:38 pm


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