Sit down, in 2008 oil prices reached a record high of $145 per barrel, and they dropped to $35 before rising to $100 in 2014. Watching oil go to zero doesn’t surprise me, it is just shocking. And certainly, it doesn’t mean that people will have gas for free or the prices will go down as much as you would expect and if you look at most companies their stock prices do not reflect this sudden downward spiral.
These kinds of phenomena can happen when there is a state of panic over the over-supply and in this case the storage capacity of oil. The market nose dives and comes back up for air once the traders, producers come to terms with the current demand.
But lets distinguish between Trump oil and the other stuff. West Texas Intermediate comes from the United States and is the benchmark for U.S. oil prices. Brent North Sea oil comes from Northwest Europe and is the benchmark for global oil prices.
Now can Mr. Trump afford to let his oil go into the toilet? I highly doubt it but then again there aren’t too mant presidents like him. An obvious farce our next candidate could be more diplomatic, but will he/she be able to handle the global mess – the $64 question.
U.S. oil production increased to a record 12 million barrels a day in September 2019. It was also the first time since 1948 that the United States exported more oil than it imported. In 2018, the United States became the world’s largest oil producer and now China is trying to put America under more oil pressures. I guess the Chinese can stockpile China and doubling the fill rate is strategic. Taking advantage of the low oil prices and somewhat supporting the oil market amid crashing demand by diverting more imports to the storage, rather than outright slashing crude imports.
Keep in mind all oil transactions are paid in U.S. dollars, and most oil-exporting countries peg their currencies to the dollar. As a result, a 25% rise in the dollar offsets a 25% drop in oil prices while global economic uncertainty keeps the U.S. dollar strong.
Categories: Kitchen Facts