Yesterday oil price took a negative plunge globally, as it jumped to below $0 a barrel for the first time as the coronavirus pandemic disease continues.
However, MarketWatch reported that the soon-to-expire May contract for the U.S. oil benchmark finished deeply in negative state of $-37.63 a barrel. This mean that investors will have to pay the buyers to take delivery of crude oil, considering a growing glut of crude and a lack of storage space.
Meanwhile, with hundreds of millions of individuals across the globe on lockdown, so as to curb the spread of the virus, travel by car or plane is nearly nonexistent. Factor in a major lag in manufacturing and other economic activity that requires oil and the reasons for the dramatic crash become apparent.
Furthermore, while OPEC Plus countries reached an agreement to slash production by more than 9 million barrels of oil per day, but this new crash in price will show that it won’t be enough to beat the surplus of oil currently out there today.
This one-day dive is the largest on record going back to 1983, and also the lowest level for a contract on record, as stated by Dow Jones Market Data.
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