OIL PRICES TAKE A MASSIVE DOWNWARD PLUNGE AS THE DEMAND DIMINISHES, WALL STREET DIPS

Crude oil has now become cheaper than a bottle of water! The staggering collapse of the demand amid the COVID-19 lockdown has plummeted the oil industry and has posed a severe threat to the economy. The stock markets recorded a slip-on Wall Street, after the slashing of the crude-oil prices on Monday.

It is being seen as a historic low in the oil prices where the price of crude oil is lower than a bottle of water. On Monday alone, a drop of 90% in the crude oil delivery was reported. The major part of this plunge is being anticipated due to technical reasons.

As the world has come to a halt, and many people are stuck in their homes due to the COVID-19 lockdown, oil industries are facing a significant crisis. The energy demands have collapsed, and owners have no place to store their crude-oil stock. In the afternoon trading of Wall Streets, the shares were experiencing a slippage with the S&P down 1.2%. But the crude oil price saw the most dramatic downfall as the prices went down to -$35.20 as of 2:30 pm on Monday. From $60 at the start of the year to this negative number. The impact has been caused due to the business shutdown of several industries all across the globe.

Although a significant amount of drop is being perceived due to technical reasons, it is being said that the May delivery contract was very close to expiry. Subsequently, the trading volume was light. This may have caused the aggravate disparities. The demand has become so low that the storage facilities of the crude oil are full at this time. 

The tanks will hit their limits within three weeks, and the oil trader is looking for alternatives to prevent themselves from taking the burden of oil-storage. For June delivery also the numbers have fallen to about 16.5% to $20.90 per barrel. The big oil-producing firms are considering cutting off their production to balance the supply and demand, but many analysts and experts say that it is not enough. 

The fall is due to the massive lack of demand and storage space. Even the production cut is inefficient in stabilizing the current situation. The first three months of the year 2020 were considered to be reliable for the oil industry, but the subsequent months in the light of the lockdown due to the pandemic has posed a massive danger. The oilfield engineering company surveyed the situation and has said that the current situation is so drastic that the industry “cannot reasonably estimate” the loss and how long it will take to recover from this situation. It is being estimated that the damage will prevail for the rest of the year 2020, especially in North America.

The international standard of crude oil, Brent Crude, also went down from $25.62 to $2.64 per barrel. Pessimists see this infection as one of the hardest-hitting elements in the economy. The rescission is being anticipated to be a severe one, and many believe that the suffrage will be unrelenting in this prospect. The time to regain control is also unknown. 

Amidst all this chaos, there are a few industries that are proliferating profits in the light of the lockdown. Amazon recorded a sharp 1.7% increase, and Netflix also jumped up by 4%. Both of these industries are set to gain record profit. 

Several countries around the globe have released some exemptions from the restrictions on the businesses, which were shut down to curb the spread of the virus. The health industry has also issued a warning stating and alerting the authorities that the pandemic is nowhere near over. Even the slightest of distraction or misjudgment can cause severe implications in society, leading towards even more significant problems. It is not the time to resume a healthy life. 

Some analysts also indicated that recent stock recovery is only due to the expectations of the investors and industrialists. Many investors expect to rebound efficiently once the quarantine is over, and the lockdown is uplifted. The profits are expected to shoot up linearly. As of now, approximately 2.5 million people across the world are under the influence of the disease. More than 170,000 people have lost their lives. The USA is leading in the total number of cases and deaths in any country.