Gas is cheap in most places around the US as of recent, and it’s not just because of curtailed demand due to the, which causes . Just as the virus spread to numerous parts of the world, Saudi Arabia began to cut prices and set off a price war against Russia.
Now, oil prices are falling at a rapid rate. Paul Sankey, managing director at Mizuho Securities, told Fox News Business it’s totally possible for oil prices to hit a negative figure. As countries continue to pump oil, they need to store it somewhere, and when storage gets expensive (or there’s simply no more room) oil companies could pay typical buyers to get it off their hands.
Through it all, it’s not particularly good news for US oil producers who extract their goods from shale, or Canadian oil sand producers. The process is more expensive and cheaper oil from other countries may quickly price them out of the market.
Francisco Blanch, a commodity strategist at Bank of America, told the publication it’s possible we may see inventories jump to a 900 million barrel surplus. It all adds up. If social distancing becomes the long-term norm, there are fewer cars on the road. If folks stay home and push off a vacation, that’s less fuel needed for planes. If industries go offline for periods of time, they don’t need power.
As of this writing, crude oil prices are up to around $25 a barrel, but it follows a major dip to around $20 a barrel yesterday. In all likelihood, we may see prices fall into the teens.