This week has kicked off on heightened tensions especially in the oil industry following the massive crash in oil prices below $1 per barrel due to the lack of demand as a result of the coronavirus pandemic.
Crude saw a huge crash to around -$37.63 per barrel on Monday with the lack of demand being the main culprit. This forced oil producers to lower oil prices to negative levels so that they would pay buyers to take the excess oil barrels due to the lack of adequate storage. This is an unusual move that the industry has not seen before but a necessary one considering the current situation.
The crude oil prices however bounced back from the -$37.63 level as the oil industry attempts to make a recovery but the prices are still bearish. This performance comes barely two weeks after the OPEC meeting aimed at helping to restore oil prices to normal levels but there is nothing normal about the price dropping to the recent historic lows.
The oil price crash comes on the heels of the United Nations’ recent call for the use of a COVID-19 fund that would help soften the impact of the coronavirus on the labor market. So far millions of people have lost their jobs due to the indefinite shut down of many industries following the spread of the coronavirus which is currently a global pandemic.
People have been forced to stay indoors to avoid catching the virus and also to avoid spreading it. This has subsequently led to the demand for most products and thus the shutdown of many industries. The UN’s recent announcement and call for the use of economic support measures highlight the fact that the situation has worsened and there are concerns that the current recession will hit hard.
The oil industry has already been heavily affected as evidenced by the recent price crash. This is just one of the many industries currently taking a hit and the worst part is that the COVID-19 pandemic is still not in control. There is no telling how long this nightmare will last.