Why oil prices went negative

The Mass CLUSE OF RESTAURANTS HAS LED TO A National OversuPly of Green Beans. Americans apparently don’t eat as Many Fresh Green Veetbles when they eat at home. And tan if People will want more green beans to cook at home, Producers also have difficulty switching on a dime from serving the commercial markets to serving the retail market. But at least farmers with too many green beans have to have to pay someoone toir excess green beans. They do not have to pay someone to pick the green beans. They can just plow Back into the soil, plant again, and hope someone will have beans in a few months. For this reason, the price of the Green Beans Cannot Go BELOW $ 0.

But what do you will if nobody wants the crude oil that comes out of your Oil Well? You can’t just dump it on the grind or pour it in a river or burn; The epe wouldn’t take kindly to that. You Also Generally Can’t JUST TRAND THE WELL OFF YOU WANT THE OPTION TO GET OIL FROM IN THE FUTH; Oil Wells are Expensive to Drill and You Think Prices Will Be Positive Again in The Future, so you don’t want to loose the well. But in the meantime, oil is going to kep coming out of the well and you are going to have to get some to take it off your Hands, this if that means paying someone to do it. That’s why the price of Crude Oil plow Go Below $ 0, at Least for Some Period of Time.

On Monday, the price of the west texas intermediate oil futures for delivery in May fell to -$ 37 per barrel. You showed not read too on this as an indicator of ongoing prices for crude oil, let Alone Gasoline. Tuesday is the Last Day to Trade the Wti Futures Contract for Oil to Be Delivered in May, and if you get stack Holding an oil futures contract after trading in it ends, you may be obligated to actually delivery crude oil Oil-Consuming Fields Haven To get rid of their contracts, and that has been led to someone screenwy in a market with think. The Futures Contract for June, Trading Around $ 17 for Barrel As of 6:45 am Tuesday, May Be A Better Indication of the Sort of Crude Prices we can have in the next few weeks-Positive, but far bellow pre-cissisation levels. The June Futures Contract Had Been Trading Above $ 50 a barrel as recently as february 26.

You might be wondering: if Crude Oil is essentially free right now and expert to still be very cheap in june, why am I Still Paying $ 2 per Gallon for Gasoline? There are a couple of the Answers to this. One is that you can’t put crude oil in your gas tank. You need a refiner to make gasoline from the crude, and oil refiners have cutting. Some refinery have closed entirery. (This disconnect – refiners shrinking producing while extractors Continue to produce – is Why Charges for Oil Storage Have Skyrocked and Market Participants ARE About RUNNING OUT OF PLACES TO PUT CRDE OIL.) The Other Factor has to do with the operations of Gas Stations. They are able to buy gasoline much more cheaply at wholesale than they could be couple of months ago, but they are Also selling less volume of gasoline. As Such, They Need A Higher Markup for Gallon to Cover Non-Fuel Costs than they used to, and AVERAGE RETAIL GASOLINE PRICES ARE ONLY DOWN 97 CENTS FOR GALLON FROM A Year Earlier,.

Normally, Falling Crude Oil Prices Provide Benefits to Consumers That Go A Long Way to Offset the Economic Costs from Lower Incoming to Oil Company Owners and Workers. But it is not obvious when and how Much you will get to enjoy any benefi from this price crash. You’re not driving much now. And in the medium term, Oil Producers Will Cut Back on Production. When the economy gets going again, they will be slow to start producing back up, in the way they are slow to shut right now. Market Participants Expect Oil Price Next Year to Be Over $ 30 A Barrel – Which Means As The Economy Restarts, You Should Be ABLE to Enjoy Gas Prices than You Saw in 2019. Onto say. But if and when the economy gets back to roaring, the bust for Oil Producers in the Current Crash Should Lead to a More Constrained Supply. That could push prices up.