The 2020 OIL CRISIS Explained
Based on the closing price of oil yesterday, oil producers are literally paying buyers $37.63 a barrel to take oil from them. Now this is not based on the oil price right now, this is based on something called a futures contract. And this is simply a type of business agreement where a price is determined today for a commodity, like oil, to be delivered at a future date.
So the price of oil to be delivered in May dropped to -$37.63 a barrel yesterday. This is because a barrel of oil has become a liability at this point, not an asset. Under normal market conditions, oil does have value as it can be refined and used for many purposes. But right now, with the world effectively shut down, oil demand has plummeted.
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