Why did US oil prices hit negative territory?
An unprecedented fall in American crude oil sales has added to the hardships caused by the coronavirus.
It is one of the world’s most valued commodities, but coronavirus lockdowns have overturned the dominance of oil.
The worth of a barrel of United States oil fell to less than nothing on Monday. That is the first time in history that the price has turned negative.
This means producers ended up paying buyers more than $30 a barrel to get oil off their hands.
It rebounded slightly to just over $2 the next day.
Monday’s slide was because the world has more crude than it can use.
And it is also about how much oil can be stored. Storage facilities and even ocean tankers are filling up.
Fears of not finding a place to put oil in next month mean nobody wants crude. That has led to a severe drop for West Texas Intermediate – a benchmark for US oil prices.
Oil is traded on futures contracts and prices for crude to be delivered in June are now at about $20.
The international benchmark for Brent crude oil also went down to its lowest in 18 years.
What will that mean for the US and the global economy?
Presenter: Richelle Carey
Guests:
Bob Cavnar – Oil and energy industry expert
Cornelia Meyer – CEO of Meyer Resource and an oil and gas expert
Stephen Innes – Chief global market strategist at AxiCorp, a global institutional financial services company