The drying oil

[Sanugarid]

Okay we get it, less cars, less vehicles traveling so the oil is not that what we really need right now

But, why is the price be looking like this? It is not only the cars that uses oil, we also have a lot of machines that isn't running without the oil

Don't tell me the covid-19 global pandemic cases is inversely proportional with the oil price lol



as of now XRP is worth more than a barrel of oil. Smack it to the face of those people who's shouting that cryptocurrency is soooo VOLATILE  

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[coupable]

The price of oil barrel is determined according to many factors, not only by ask and demand like other marchandises. It has been always that volatile because of it's unstable condition, like bitcoin price.
Let me tell you that there is still asks to buy oil from classic providers, even there is no cars and no vhecules, but as you said, other industries and machines use it. Even the price crashed, some countries are actually living in an oil crisis. The shippement of oil becomes the most difficult part in the oil marketplace.

[figmentofmyass]

Okay we get it, less cars, less vehicles traveling so the oil is not that what we really need right now

But, why is the price be looking like this? It is not only the cars that uses oil, we also have a lot of machines that isn't running without the oil

Don't tell me the covid-19 global pandemic cases is inversely proportional with the oil price lol

in an indirect way, they are. the economy in high consumption nations is experiencing deflation---no one is spending money. that means demand for import goods is plunging. the pandemic therefore has world trade screeching to a halt. so is air travel, which is down between 90-100% amidst all the travel restrictions.

with consumers refusing to spend, and scant world trade and air travel, who wants to pay to store tankers full of oil? nobody needs it anymore.

negative prices on may delivery means contract holders are being paid handsomely just to take delivery on oil. that's how bad things have gotten. this has never happened before.

[Wenbing]

While the above factors you highlighted are the cause of the decline in oil price. The household is now the only consumer of the oil. This is very minute in the demand for the global oil. Obviously, the demand for oil is lower than the supply of oil.

But, will the price increase as OPEC has reduced the oil production volume?

[fillippone]

There is simply  too much OIL.
And too many non-OPEC producers (USA and Russia) are flooding the market with OIL.
OPEC is non anymore the powerhouse it used to be.
And also it's market share is a fraction of what it used to be years ago. Now the USA alone have a production roughly at 50% of OPEC volumes.

A few production cuts will be enacted from May 1st. Let's see how it plans out.

Regarding the negative prices the explanation is quite simple. And very much of a short term reasons.

There are several reasons for this.
First of all, the move is due to the future of May, which will stop trading tomorrow.
From Thursday the oil will trade at the June expiration and the price will return to being more "normal" level around 22 dollars.
As mentioned all oil related products (gas, heating oil etc) are already priced on Jun expiry.

But why May contract has dropped so much?

1. The WTI has a single delivery point in Cushing (OK). All the deposits in Cushing are full, so nobody wants to "buy" oil in that location, because the cost of storage is very high.So nobody want to buy May expiry.
2. There are many "financial speculators", that is, subjects who do not want/can in any case get physical oil delivered in Cushing. This causes the fact that these subjects must necessarily close the position before the expiry of the future and therefore are forced to "sell" the future forcibly. so something like a  Long Squeeze.
3. Who are those longs? Apparently Oil ETF say the biggest inflows in history during last week., both in linear and in leveraged flavours. This caused a MASSIVE long positions in front months. So this answer the above: who needed to roll their position selling May futures to buy Jun?
4. The June expiration future has an greater open interest and much larger volumes, so this one is more difficult to move with "few volumes" and in fact has fallen much less.

OF course COVID-19 can be a perfect explanation for the "2020 leg" of the long trend graph you posted above.

[Genemind]

The pandemic might have a big impact on it, with people staying at home, factories and productions are temporarily closed down, imports and exports restricted in other countries there might have been a lot of supplies of oil than the demand for it. This pandemic really had affected almost all the sectors of the economy. I think this will only be temporary, and once sone companies and  lockdown had been lifted everything will recover slowly.

[Naida_BR]

The way to stop this price drop is to decrease the production.
OPEC usually does that and the price is going up again. I wonder why they still haven't taken such measures. In the end they are going to suffer from a huge inflation.

[AniviaBtc]

While the above factors you highlighted are the cause of the decline in oil price. The household is now the only consumer of the oil. This is very minute in the demand for the global oil. Obviously, the demand for oil is lower than the supply of oil.

But, will the price increase as OPEC has reduced the oil production volume?

No one is expecting for this to happen, but it is really true that this event is the first time where crude oil experiences crash in price that reaches 0. It is not only the household who uses oil, there are factories that needs oil just to operate and produce more products that we are needed during this quarantine. Food manufacturers and etc., are using oil so that their machines will work and the production of their products or items is continuously operating. Not all businesses are closed because of the quarantine, their are incorporation that utilizes oil so that they can grant our necessities to produce their product. Transportation is still active in using oil but this quarantine makes it minimal compared to the normal days where virus is not yet existing.

[Ucy]

Well, the good thing about this whole thing is that the earth will rest a bit from the ruthless activities of mankind on her.
We should be moving to the good/safe sustainable alternatives for our own good and the good of earth.
Before you invent something, consider the disadvantage... Its good should far outweigh the bad or there should not be bad at all.
There should be serious consequences for people who are aware of the implications of these technologies/industries but insist on creating them, and eventually destroying the environment.

I sometimes feel very guilty knowing that i in some ways, depend on this things that are  slowly destroy our world. This is one of the reasons I am moving to a clean, good, safe, sustainable living.


Hopefully it doesn't become business as usual for this kind of industry.

[$crypto$]

The possibility of this pandemic factor is because mass production in the industry has stalled due to the long-lasting lockdown in some areas, of course this will be of little demand because according to people now rarely go out to drive cars so that the supply of oil is large and uncontrolled due to demand according to covid-19.

I do not think whether this is another factor that is clearly linked to the pandemic so that the crisis is continuing and who knows when it will be finished, but I heard the news that in the east by selling oil cheaply because of continued turbulent economic inflation.

[BitcoinTurk]

Unfortunately, the bad situation of the world markets is reflected in oil prices today. In the evening, I do not remember exactly how many years later this happened, but oil prices have declined very badly, and prices of oil futures have reached negative levels. Unfortunately, I think it is a nightmare night for the oil investor or oil company investor nowadays. I think it is important to remember that this crisis has also been likely to infect the stock markets or cryptocurrency markets.

[JeromeTash]

But, why is the price be looking like this? It is not only the cars that uses oil, we also have a lot of machines that isn't running without the oil

Because cars are the biggest consumers oil and i know you know that. So lockdowns across the Globe means less demand. On top of all the crisis Russia and Saudi Arabia did something unusual after their stupid disagreements and decided to flood the market with excess oil.

You are also forgetting that more and more people are switching to Greener and renewable alternatives of Energy like Electric cars. Look at the trend of the graph, the price of oil may never achieve a new all-time high again

[arwin100]

But, why is the price be looking like this? It is not only the cars that uses oil, we also have a lot of machines that isn't running without the oil

Because cars are the biggest consumers oil and i know you know that. So lockdowns across the Globe means less demand. On top of all the crisis Russia and Saudi Arabia did something unusual after their stupid disagreements and decided to flood the market with excess oil.

You are also forgetting that more and more people are switching to Greener and renewable alternatives of Energy like Electric cars. Look at the trend of the graph, the price of oil may never achieve a new all-time high again

For now I think there's no effect for switching on renewable energy since actually electric cars globally spread since most of the car guys are still using a oil operated cars and the major cause that contributes for the current price dried up of the oil are the current lock downs happening on the world since if there are no demand coming starting from big factories to the lowest sector who use it well provably we can see more of this things coming.

And for continuously extending up the lock downs of countries affected for sure we can see more price decreased and this could hurt the oil industry badly.

[Negotiation]

At present, the problem is caused by the virus crisis Since everyone is sitting in the lockdown both production and investment are declining so oil production is declining. If this continues the world will be worse off We need oil in our daily life not just in cars This is why oil companies will not be taken into account if the oil companies take any action.

[samcrypto]

They produced to much oil and now, there’s no big demand on that but we all know that Oil is still important and when the things get to normal, oil will become more expensive as the economy is trying to survive. It hit the price below ZERO but we also know that it bounce back again, we don’t know what’s happening but the market is still on a good position, either an opportunity or a dead end to some people.

[Febo]

Okay we get it, less cars, less vehicles traveling so the oil is not that what we really need right now
But, why is the price be looking like this? It is not only the cars that uses oil, we also have a lot of machines that isn't running without the oil
Don't tell me the covid-19 global pandemic cases is inversely proportional with the oil price lol

Demand reduced drastically short term. Shale oil producers cant just simply pause their production. If they pause it costs to start again are enormous.  Classical oil pumps can be turned on and off easily and they do it.

[sheenshane]

Obviously one of the most reasons is about this pandemic has a huge role for the changes in the price of oil. During this global crisis where a limited number of transportations are allowed to be operational as well as production and other business are a force to shutdown temporarily then the demand on oil has been reduced. In order for oil companies to sell, they will do it at a lower price to encourage everyone to purchase their oil.

For now, let us enjoy the low price because after this pandemic the price might become back to the normal price. Good benefits to the consumers but it is really sad to the investors and businessmen that probably they will experience as of now a huge loss.

[Sanugarid]

They produced to much oil and now, there’s no big demand on that but we all know that Oil is still important and when the things get to normal, oil will become more expensive as the economy is trying to survive. It hit the price below ZERO but we also know that it bounce back again, we don’t know what’s happening but the market is still on a good position, either an opportunity or a dead end to some people.

Yeah, and then don't open the market for oil obviously so what we are going to do is to wait for the market to open and invest as much as we can because if the pandemic crisis ends there would be a skyrocket demand for the oil making the price up again and will turn the 21 year low to another ATH. Cryptocurrency market on the other is looking great so far I do trading and impressively making good returns of investment. I'd be thinking if the pandemic crisis will take long, are we going to have a good market like this? I don't wish it to happen tho.

[gantez]

But, will the price increase as OPEC has reduced the oil production volume?

This can be a good policy or way to make oil price increase again because in economics, scarcity brings increase in demand which will make price to rise as few people have the product to sell and they can create their own bid price. However now that the economy itself is sick with covid-19, the demand may not rise because people are observing indoors and no movement

[pixie85]

Obviously one of the most reasons is about this pandemic has a huge role for the changes in the price of oil. During this global crisis where a limited number of transportations are allowed to be operational as well as production and other business are a force to shutdown temporarily then the demand on oil has been reduced. In order for oil companies to sell, they will do it at a lower price to encourage everyone to purchase their oil.

For now, let us enjoy the low price because after this pandemic the price might become back to the normal price. Good benefits to the consumers but it is really sad to the investors and businessmen that probably they will experience as of now a huge loss.

No, the pandemic is not the main reason. The main reason the disagreement between OPEC and non-OPEC countries. 

The demand was really going down a bit and OPEC countries wanted to decrease production so that the prices wouldn't go down drastically.

I read that some countries don't know what to do with oil surplus so they're loading every single container they have and keep trains fully loaded ready for export. I believe the prices will go down even more.