Oil goes negative

Brock Maloy, Ads Manager

The oil industry has been enduring a perfect storm of sorts during the last few months. This storm brewed out of a decrease in demand for oil from the coronavirus lockdown, as well as an oil war between Saudi Arabia and Russia. They have relentlessly flooded the market with oil driving down the price as well. Oil tankers are left stranded off the coast, filled with oil and no one to sell it to. Gas was already at lows and now in Florida gas prices can be seen well under two dollars a gallon near 1.80 a gallon, surely set to drop lower, maybe even below a dollar as oil made the -200% slide on Monday, April 20.

At the end of the futures contracts, if you can’t day trade It away by the expiration date, you will have to take delivery of 1,000 barrels of oil. Usually you need to pay a steep price for this but on Monday the price was -42 dollars a barrel (yes its possible). This means that you had to pay someone 42 dollars a barrel to store your oil. This was also the first time they have ever traded negative.  So no one wants to take your oil, and now you have to take delivery of the oil or get sued for way more, wow what a time to be alive.

All jokes aside, the Oil Industry in America is going to be eviscerated by the current prices right now. Most U.S. shale companies need a price at 48 dollars a barrel to break even, oil is currently trading 40 dollars below that.  Some states rely on the export of oil for thousands of jobs in their state.  States like Oklahoma can bee seen with oil fields all throughout and are now pumping worthless oil into the market with no buyers. They say it will cost them more to cease production totally. Now the June contract is around 14 a barrel and no end in sight God bless America.