The article blames the corona lockdown, but other sources I’ve seen have the OPEC-Russia price war. Does anyone have some good analysis articles that break down the factors?
Demand shock is leading to a loss of places to put it, so the price must fall to a low enough price to make it profitable to pay increasing amounts to store it until its worth something.
The price war has depressed the price enough that to keep revenue up companies must continue to pump flat out.
Quite a nasty scenario to find oneself in.
https://en.wikipedia.org/wiki/2020_Russia%E2%80%93Saudi_Arab...
Saudis and Russians have decided to increase their output of oil at the exact same time that most companies and businesses are choosing to reduce their oil consumption.
Additionally, there are not a lot of cheap ways to store oil long term, and it is difficult and costly to shut down production as well.
In Western Canada, pretty soon there will be negative oil prices, because the oil there is of a lower quality than others. Basically, they are paying for it to be trucked away so that it doesn't harm future production efforts.
In my mind you just turn the pump off that's sucking the oil out of the hole.
So stopping production implies letting the ground cool, and restarting implies dumping a lot of (expensive) energy back in before oil will flow.
The day the oil war began, Brent dropped from $50 to $31 in two trading days, the greatest rapid decline in many decades. The 24% drop at that time was the greatest one day decline since 1991.
https://www.cnbc.com/2020/03/08/saudi-arabia-to-hike-oil-out...