Recently, oil prices have been very cheap in most parts of the United States, not least because of reduced demand caused by the new crown outbreak,media CNET reported. Saudi Arabia, on the other hand, has started cutting prices and launching a price war against Russia, with more of its oil flowing into the market. Now, oil prices are falling rapidly. Paul Sankey, managing director of Mizuho Securities, told Fox News that oil prices are likely to fall into negative territory.
As these countries continue to pump oil from the ground, sankey argues, they need to store it somewhere, and when storage becomes expensive (or not more space), oil companies can actually pay a typical buyer to take it away. All in all, while this will almost certainly lead to further lower oil prices, this is not particularly good news for U.S. oil producers that extract products from shale or Canadian oil sands producers. The process is more expensive, and it could soon be overpriced and unbought by cheap oil from other countries.
‘We could see inventories jump to a 900m-barrel surplus, ‘ Francisco Blanch, commodities strategist at Bank of America, told the publication. If “social segregation” becomes the long-term standard, there will be fewer cars on the road. If people stay at home, the plane will need less fuel. If all walks of life shut down, they would also need no energy.