Today's most important economic news comes from US oil. The market is down by -306% and reached down to -$36.9 per barrel... Let me explain what that means. It means oil producers are paying buyer to get rid of the oil! Let me explain this shortly.
There are 2 reasons for that but one is dominating the other.
Low Volume Trading in Future Oil Contract
As other financial markets scared of corona-19 virus effects and can not predict the end, investors hold their money. Yes please, they keep it in USD. Which creates no interest in the market if there is no volume, then market faces bear-run. This is simple to understand for anyone.
Supply and Demand
Second one, the dominant, supply and demand ratio. YEP! decrease in consumption, which is you who is not driving cars, planes, ships, etc. Why are you impacting oil market. There are people who has storage full of crude oil and want to sell that oil and even pay money :)
Let me explain three factors for you;
- Storage
- Terrible March, April, more possibly May oil demand
- Rise in Dollar
Corona pandemic has hit almost all global market including locals hardly. They all suffer from this virus spread as oil market. Since there is no consumption , the storage are full and no room left for keeping more physical crude oil. And last thing, dollar rise, hits other countries economy even worse. Think of oil and even hot money flow depended countries. Their currency looses value against global accepted currency, the dollar.
Isn't it funny that oil based currency defeating other currencies even though oil markets is worse. LOL!
Let me show you couple graphs;
The first graph will tell you about how humanity, we, consumes oil. Big percentage is for transportation by up to 70%. Let me say transportation has decreased by up to 70% all over the world. Industries laid off many to cut expenses during this pandemic and left essential departments only operational. This also counts around %40 cut in industrial field. Over all consumption went down by 50-60%, which is a rational reason for oil price to get down from $50 to ~$20-$25.
Second graph is oil price over a year April 2019 to April 2020. Do you see that big drop... When will it be back on? Only CORONA knows...
What is coming next: Russia, Saudi Arabia,... Corrupted consumption based economies are subject to fail. Look at what they did to survive little bit more, OPEC oil cut agreement.
That is why decentralized economic freedom. One day you will be left with millions of dollars that are able to only buy 1 kg of tomato, MAYBE.
Just one thing before I pause it here... GO Crypto, GO financial Freedom.
To buy your Cryptocurrency, click here.
TO be CONTINUED...
