According to NBC News, the price for crude oil has just plummeted by almost 300%. It has dropped so low that for the first time in history the price for oil is in the negatives.
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For the month of May, the price will be negative $37.63 per barrel. This means the producers of oil will basically be paying buyers to take the oil off their hands.
This is happening due to worldwide lockdowns, stay-at-home orders, and social distancing that is preventing people from spending money on traveling. Hardly anyone is on the roads right now which has made the demand for oil pretty much drop to zero.
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The United States storage facilities, ships, tanks, and pipelines are getting so full that they’re having a hard time finding spots to put new shipments of oil they have signed contracts to buy.
The main storage hub in the United States is in Cushing, Oklahoma which can store 80 million barrels of oil and there are only 21 million barrels of free storage space left as of right now.
In order to combat a surge of surplus oil, President Trump has made a deal with Saudi Arabia, Russia, and other countries to cut 9.7 million barrels from being produced per day beginning in May. The price is projected to go back to $21 per barrel in June and $27 in July.