Oil Futures Plummet Below Zero As Demand Essentially Evaporates

(TheFreedomFlag.Com)- Oil prices continue to crash, even after the U.S. crude futures experienced an historic collapse on Monday.
U.S. crude futures dropped below zero for the first time in history. Prices finished Monday at -$37.63 a barrel. The May contract expires on Tuesday.
In conjunction, the West Texas Intermediate June contract also crashed above 11% and sits at $18.14 a barrel. The global benchmark for oil futures, called Brent, crashed almost 22% all the way down to $19.92 a barrel.
The U.S. crude oil market is feeling the same pain that is happening in the Asian and European indexes, as the demand for oil has vanished almost completely overnight because of the coronavirus pandemic.
With fewer people driving, air traffic grinding to a halt and travel in general not happening, places are running out of room to even store the extra barrels of crude oil that are not in demand right now.
Earlier this month, Jeff Wyll, a senior energy analyst at Neuberger Berman, said:
“The market is starting to signal that not only is there no demand for this crude, eventually there could be nowhere for it to go.”
According to Goldman Sachs, it’s been since 1998 that storage facilities, terminals, pipelines, ships and refineries have reached capacity when it comes to storing crude oil. This has caused a plunge in the pricing for crude oil, which is being seen as gas pumps throughout the world.
JBC Energy released a report in the first week of April that read:
“Demand is falling so fast relative to supply that very soon many producers’ main issue is not going to be whether they can ensure operating profit but rather if they can find an outlet for their crude.”
The disappearance of the demand for oil forced two of the world’s biggest producers of it — Russia and Saudi Arabia — to agree to cut their supply by an amount that is a new record. But even that hasn’t convinced oil traders that the excess in supply is going to ease off anytime soon.
The biggest way this affects the everyday American is at the gas pumps. On Monday, AAA said the average price of a gallon of gas was $1.81 nationwide, a drop of 5 cents per gallon from the week before, and 36 cents per gallon less than what they were at the beginning of March, when stay-at-home orders were just being announced.
Compared to this time last year, a gallon of gas is roughly $1 cheaper now. Still, the price of crude oil isn’t often the best predictor of the retail price of gasoline for vehicles.
A spokesman for the National Association of Convenience Stores, Jeff Lenard, explained:
“Wholesale gasoline futures and oil futures are definitely linked, but they don’t necessarily reflect each other on any given day.”
Essentially, people seeing crude oil prices in the negative who are hoping for free gas at the pumps are going to be disappointed. Even still, with the demand for gas basically evaporating, consumers in the U.S. could be enjoying low gas prices for some time to come.