US, WASHINGTON (ORDO NEWS) — Nobody needed oil: the supply surplus is too large, and demand, on the contrary, is rapidly falling amid isolation measures in the world’s largest economies.
Oil refineries are starting to shut down because nobody needs the fuel they produce, Bloomberg writes.
Moreover, the agency claims that in physical markets where there is no access to the sea, sellers themselves pay consumers to pick up oil barrels.
At sites with access to tankers, oil still costs less than $ 10 per barrel.
“The physical oil market has stalled,” said Bloomberg Gary Ross, chief investment officer at Black Gold Investors LLC.
He noted that in conditions of falling demand, logistics simply collapses.
Traders say the situation could be even more intimidating this week as
there are simply no signs of a recovery in demand.
Reducing consumption has no precedent since a sustainable supply of raw materials more than a century ago became an important condition for the functioning of the global economy, Bloomberg notes.
The Great Depression of 1929, the double shock that the market experienced in the 1970s, and the global financial crisis are no match. Usually, 100 million barrels of oil are consumed per day in the world, and traders and analysts estimate that up to a quarter of this demand has disappeared in just a few weeks.
The global airline industry is standing, countless businesses and factories are closed, and billions of people are forced to stay at home.
However, as soon as the spread of the virus in the world begins to decline, and quarantine begins to be removed, business activity will begin to recover quickly, although the consequences of the crisis will certainly be very serious.
By the way, the futures market with a high degree of probability will begin to recover even earlier – as soon as the first hints of quarantine removal appear.
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The article is written and prepared by our foreign editors from different countries around the world – material edited and published by Ordo News staff in our US newsroom press.