Job losses grow as demand dries up.
The price of U.S. oil has turned negative for the first time in history. That means oil producers are paying buyers to take the commodity off their hands over fears that storage capacity could run out next month.
Demand for oil has all but dried up as lockdowns across the world have kept people indoors. As a result, firms have resorted to renting tankers to store the surplus and that has forced the price of U.S. oil into negative territory.
Oil and gas industries have already cut more than 6,400 jobs on a single grim day when the price of crude fell below $20. With the negative pricing now in effect, more job losses are inevitable.
The oil and gas industry supports 9.8 million jobs, or 5.6 percent of total US employment, according to PwC.
Bob Yawger, director of futures, MIZUHO, New York, said, “ It’s a historic day. What it means is there’s no available storage anymore so the price of the commodity is effectively worthless. There’s no place to put it, so you’ve go to flush it basically. They don’t want it. So when it’s minus a dollar, they’ll pay you a dollar to get it out of there. The bottom line problem is that pipe is full and so is storage, which is kind of weird because if you look at the EIA numbers it does not represent maximum capacity at Cushing at this point… It also implies that some folks are trying to get out of the May contract to the best of their ability without a lot of time left… Some of those folks were probably long the May contract and now they’re trying to bail before the expiration. I’ve seen some ugly expirations in my life but this obviously is an all-time record holder.”
As the Lord Leads, Pray with Us…
- For each and every American who will be without a job following the fall of oil prices.
- For investors with heavy portfolios of natural resources.
- About the essential things necessary for the reopening of the American economy, so that commodity demands can increase.
Sources: BBC News, Houston Chronicle, AP, Reuters
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