World’s oil supply extensive ramped up because of empty roads, flights grounded, and even factories aren’t working due to the pandemic disease COVID-19. The unexpected and steep downfall in oil demand never occurred before.
The production of crude oil has largely increased and still continues due to the price war between Russia and Saudi Arabia. Moreover, Americans crude oil producers don’t like to be the first country to halt production.
It is expected that the excessive supply of oil would soon fill the room to save the unnecessary barrels of oil. Neuberger Berman’s senior energy analyst, Jeff Wyll said that the market is giving a signal that there is no need for the crude oil, finally, there is no space for it to store.
JBC Energy’s analyst briefs in Tuesday’s report that the rate of the oil demand is getting lower very fast as compared to the oil supply rate, and the upcoming problem of oil producers is to get enough storage for crude oil.
About 6 million barrels of crude oil is homeless is nowhere to go in April, and JBC reported that the number would be increased to 7 million barrels per day in the next month.
When we take an overview of the history of the oil prices for the last 75 years, then we can observe that crude prices never go down as today.
Oil is really cheap
Excessive oil production is making the worst scenario where oil prices dropped below zero, which is a harmful situation for the oil market and producers.
The shortage of oil storage means that crude producers are in a situation where they want to pay consumers to take barrels from their hands.
Neuberger said that crude oil prices are at the stage to serve oil forcefully to companies to stock it on their grounds.
Although, WTI (West Texas Intermediate) is 500 miles far from water. However, Goldman’s Currie told that WTI and especially Canada’s Western Canadian Select and WTI Midland could go negative.