Oil prices drop to $0 and below

There has been a major drop in demand for oil, with airlines mostly grounded around the world, public and private transport greatly reduced due to lockdowns in many countries, and industrial use also reduced.

This has resulted in a drop of oil prices.

Reuters:  U.S. crude crashes below $0 for the first time in history

U.S. crude oil futures turned negative for the first time ever as billions of people stay home to stop the spread of coronavirus, causing a global supply glut that has led to storage space filling up.

Brent crude, the international benchmark, also slumped, but that contract was nowhere near as weak because more storage is available worldwide.

While U.S. oil prices are trading in negative territory for the first time ever, it is unclear whether that will trickle down to consumers, who typically see lower oil prices translate into cheaper gasoline at the pump.

As billions of people around the globe stay home to slow the spread of the novel coronavirus, physical demand for crude has dried up, creating a global supply glut.

Most prices in Dunedin currently range from $173.9 to $189.9 per litre for 91 and go as low as $100.9 for diesel.

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13 Comments

  1. Alan Wilkinson

     /  21st April 2020

    Time to pump it back into a Taranaki well?

    Reply
  2. david in aus

     /  21st April 2020

    They say oil is the devil’s excrement. Now it is, you pay to get rid of it.

    A quarter of oil companies will go bust from their debts.

    Where I am, 1 litre of regular petrol is 89 cents. Pity that I don’t have much use for it.

    Once this is over, I will be buying shares in the oil company survivors.

    Reply
    • Blazer

       /  21st April 2020

      surely now is the time to buy…then!

      Unless you’re busted or on the brink.

      Reply
      • david in aus

         /  21st April 2020

        Not many oil companies have defaulted yet. It takes time.

        The rally in the sharemarket is a bear market rally if history is any guide. The sharemarkets will go lower again as companies begin to default on their debts. In 2008/2009 it took 9 months to reach bottom. To believe that the worse economic crisis since the depression the sharemarket bottoms in two months, you must be an optimist.

        If you buy some of these companies now you will lose all your money. You may not be sure which companies will survive. They will be running out of cash over the coming months, some will have hedged or have cash hoping that it will get back to normal soon. But normal will not return for at least 12 months. Their cash reserves may not last, then it is the bondholders who will own the companies and not the shareholders.

        Reply
        • Blazer

           /  21st April 2020

          Impossible to pick the bottom.
          Bondholders are sacrosanct…in the U.S anyway…and of course if they are the Fendalton/Parnell/Khandallah mafia’.

          Reply
          • david in aus

             /  21st April 2020

            True, impossible to pick the bottom.

            But, I am sticking to my gold and cash for now.

            Modern monetary theory will make my cash worthless eventually but I prefer to wait.

            Reply
          • Duker

             /  21st April 2020

            Who was it last year that was promising NZ a golden future with offshore oil drilling ?
            the boom years were 6-7 yrs back but no they had foresight

            Reply
            • David in aus

               /  21st April 2020

              Lets not kid ourselves. We still need oil to survive.

              Time from drilling to production can be decades.

            • Duker

               /  21st April 2020

              World markets my friend… do we insist on making our own cars anymore

  3. the year is 2020: oil is free and I can’t buy a hamburger for love nor money

    Reply
    • Alan Wilkinson

       /  21st April 2020

      Sounds like Venezuela, but no, it’s our own socialist paradise.

      Reply
      • Blazer

         /  21st April 2020

        next thing you’ll be wanting cream on your…scones!

        Austin Mitchell’s quarter acre,pavlova paradise is unrecognisable…these days.

        Reply
        • Gezza

           /  21st April 2020

          Wasn’t it the half gallon, quarter acre, pavlova paradise.

          The half G’s a distant memory now too.

          Reply

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