Yes it’s true, this is a historic plunge in oil futures prices. It is true that the oil just keeps coming because there is no way to shut off the larger wells. Yes it’s true that oil storage is filling up to the point where they may have to use railroad tanks cars for storage. But is this a significant point in history. I think the short answer is no. I think it may be a foreshadowing of the turbulence that lies at the END of oil. But that is nowhere near. BIG OIL is too nasty and too viscous (vicious sorry) to give up while there is a single drop to pump. Here is a great discussion of the incident:
In One Chart
About 150 years of oil-price history: This one chart illustrates crude’s spectacular plunge below $0 a barrel
The formerly unthinkable drop in oil prices below $0 a barrel on Monday is still reverberating through financial markets, as supply overwhelms demand destroyed by the coronavirus pandemic, forcing some energy companies into possible bankruptcy as storage reaches maximum capacity.
Indeed, the now-defunct May West Texas Intermediate crude US:CLK20, which expired on Tuesday, plunged into negative territory to start the week in a history-making event that saw, the front-month contract, at the time, settle at negative $37.63 a barrel before recovering some of that in the following session.
That jaunt into negative territory had never happened before that period and although the oil market was seeing some traction higher on Wednesday, with the current front month and most-active West Texas Intermediate crude for June delivery CLM20, 17.53% gaining $2.21, or 19.1%, to settle at $13.78 a barrel on the New York Mercantile Exchange, still about the lowest level since the late 1990s, researchers at Deutsche Bank thought it would be interesting to look at oil prices over the past 150 years.
Strategists Jim Reid and Nick Burns did so with straightforward charts published April 22 that shows both the nominal price of oil since 1870 and the cost of crude in real, or inflation-adjusted, terms in U.S. dollars (see chart below):
Go there and read. More next week.