With barely a week since Trump’s tweet about the international coalition with 23 countries, oil prices of West Texas Intermediate (WTI) for May delivery plunged to -$37.63 per barrel on Monday.
This historic collapse in the demand and price of futures is the first time with a flagship contract like WTI, caused by the coronavirus pandemic and a lack of storage capacity for excess supply. Further, Dow and Jones industrial average fell to 23,650, while Standard and Poor’ 500 index closed down at 2,823.
In the near-term, the situation might look far worse with a systemic failure that might force U.S oil companies to turn off the taps. Tell-tale signs like a stunted appearance in transportation and industrial activities is likely to add fuel to the fire to the current oil markets’ mayhem.
While stimulus funds are being offered to oil and gas companies, energy producers continue losing hundreds of billions of dollars in market value, and individual investors are being punished by buy futures for a larger price.
Approximately, $5 billion has flowed into U.S. Oil Fund in 2020, and more pouring in the coming weeks. With over-supply, under-demand, and storage hard to find, the wild numbers will continue to threaten the oil producers.