The price of oil can fluctuate considerably: fortunately there are ways in which you can always benefit from a crashing oil price! During the corona crisis we had an unprecedented situation where the price of a barrel of oil fell below $0. How can you take advantage of such an exceptional situation?
The coronacrisis has brought all global economic traffic to a standstill. As a result, demand for oil plummeted to a new low.
At the start of the crisis, the price of oil fell very hard. The oil-producing countries did not reach an agreement, as a result of which too much oil was still being produced. In the end, the 23 oil-producing countries made an alliance to reduce production. Even with lower production, however, the drop in demand was not absorbed properly.
As a consequence, there was a serious overproduction. When you wanted to buy oil in May 2020, you would get money for buying it. It is expensive for the producers to store the 160 (!) million barrels of oil in oil tankers.
Because of these events, people started dumping future contracts on oil. This happened because people in the current situation would prefer not to be left with a barrel of oil. As a result, US STI oil crashed 100% on 20 April and the price became negative.
What about the future of oil?
The global economy is locked in and the demand for oil will not increase rapidly. Nevertheless, every crisis will be overcome. When the virus is under control, the economy will start running again. The worldwide economy is still running on oil. The demand for oil is therefore expected to increase, and it is therefore not unlikely that the price will reach new highs in the future.
When I was 16, I secretly bought my first stock. Since that ‘proud moment’ I have been managing trading.info for over 10 years. It is my goal to educate people about financial freedom. After my studies business administration and psychology, I decided to put all my time in developing this website. Since I love to travel, I work from all over the world. Click here to read more about trading.info! Don’t hesitate to leave a comment under this article.
