US oil price turned negative which means Sellers were actually Paying buyers to get rid of oil

Coronavirus affects the prices of Crude oil badly. For the first time in history Price of the United States of America’s oil turned negative. Which means sellers were actually paying buyers to get rid of oil.

Reason:

Due to Coronavirus, Economy of the world standstill. Industries are closed. China who was the biggest importer of Oil has to put its county to lockdown. So, there is no one in the market to buy Oil. There is so much of unused oil that American companies have no room to store it. If there is no place to put to the oil no one wants a crude contract that is about to come. Oil companies started to rent tankers to store the Surplus supply and that has forced US oil into negative.

Earlier this month Opec members and Russia decided to reduce the global output by about 10%. The deal was the largest reduction in production ever to have been agreed. But still, World has more Oil than it can use.

It is not about whether we can use it or not, it’s about whether we can store it until demand rises for oil products.