Aside from the auto industry, oil has taken a massive nosedive due to the global pandemic. In fact, the price of oil in the US has reached a new low. Actually, it's negative. Yes, a barrel of oil is now worth even less than nothing.
For the first time in history (at least in the U.S.) a barrel of oil has dropped below $0. Because of the coronavirus, there's very little demand for it worldwide, which has caused a massive oversupply of what was once called black gold. That also means that there is, perhaps literally, no place to store all that crude in the world at this moment in time.
How bad has it been? At the start of the year, US oil prices were at $ 60 per barrel. Now, it's around $30 below zero meaning companies that sell oil will actually have to pay buyers, which is absolutely absurd. If this trend continues, producers will keep taking hits on losses if prices remain negative, which will carry on for as long as prices remain in the red.
Also, because of all the oil that's stored at the moment, oil producers are racking up storage costs. Traders are keen to offload their product, but it's extremely difficult to do that at the moment. Elsewhere, oil prices have not dipped below zero, but analysts say that they will not be spared from the fate suffered by the US should lockdowns remain in place. OGUK, England's business lobby for offshore oil and gas sector, added that what's happening in the US will surely affect operations in other countries. “Will not escape the impact," said Deirdre Michie, head of OGUK.
Recently, OPEC (Organization of the Petroleum Exporting Countries) and other oil producing nations have agreed to slash production by 10 percent. Again, if the downward trend continues, they will be forced to cut production even more.
As for the US, President Donald Trump said that the government will buy the overstock of oil to help the production companies. Storage facilities in the US are currently at 50% over capacity at the time of writing.
With that, expect fuel prices to go down within the next couple of months as well. While it sounds like good news for the consumer, global economies will bear the brunt of this downturn and yet another major recession is looming in the background because of the current crisis.