The pandemic depression has crushed the US oil market, and sent prices negative:
US oil prices turned negative for the first time on record on Monday as North America’s oil producers run out of space to store an unprecedented oversupply of crude left by the coronavirus crisis.
The price of US crude oil collapsed from $18 a barrel to -$38 in a matter of hours, forcing oil producers to pay buyers to take the glut of crude which they cannot store, as rising stockpiles of crude threaten to overwhelm oil storage facilities.
“The problem of the global supply-demand imbalance has started to really manifest itself in prices,” said Bjornar Tonhaugen, head of oil at research firm Rystad Energy. “As production continues relatively unscathed, storages are filling up by the day. The world is using less and less oil and producers now feel how this translates.”
Why is this good news? Not because oil is cheap, but because its now uneconomic to extract, and a whole bunch of wells will be shut down and companies will go bankrupt as a result. It should also have a flowover effect in suppressing exploration around the world - no point in looking for oil if its not economic to extract it. And in a world where we need to kill the oil industry and keep fossil fuels in the ground to survive, it going out of business can only be good news.
