US News (INL): The U.S. oil economy is in a dire predicament. The demand for oil has dropped so much in the coronavirus epidemic that many barrels of oil have run out of storage space.
Hundreds of US oil companies could go bankrupt due to the negative impact of oil prices. Reuters and CNN have reported such information.
At the same time, Russia and Saudi Arabia are flooding the world market with oil.
As a result of this unforeseen event, oil prices have plummeted to the point where US oil companies are unable to make any profit.
NYMEX Oil Futures started trading in 1983. But in a situation like Monday (April 20), they have never read before. Therefore, this incident was recorded in the pages of history.
The main concern now is how long oil prices will continue to fall. Many US companies will be protected from bankruptcy if prices rise sharply.
Buddy Clark, a lawyer who co-chairs Energy Practice at Haynes & Boone, a Houston-based law firm, said his firm is desperately busy protecting itself from potential oil bankruptcy.
“I have never seen such a scene in my life,” he said. This is unprecedented.
Reuters reports that the market ended on Monday in an unprecedented situation. At the time, West Texas Intermediate, the top US crude oil brand, was trading at minus $37.63 per barrel in the futures market.
Which means – now the producers are willing to pay the opposite price for buying oil. Because it is feared that there will be no place to store oil in May as there is no demand and production continues.
People from many parts of the world are now under house arrest in the lockdown. The roads are all empty, the planes are sitting without passengers. And the factories are dark.
Therefore, the demand for fuel oil in the international market has been steadily declining for the last three months. But as production did not stop, the storage space for billions of barrels of unsold oil was running out.
It was feared that by May, warehouses, refineries, terminals, ships, pipelines, all would be full. The BBC reports that the panic has brought US-made oil prices down to zero.