Summer in the United States would have increased demand for fossil fuels as what have been seen historically. Yet, with a shrinking global economy made worse by uncertainties in travel caused by the ongoing Corona virus pandemic, seems like there is really no silver lining for global oil players like the US, Russia and OPEC.
Oil prices in the US plummeted to an historic 9% or $36.13 a barrel, the weakest in three months. Over at Brent, world oil prices are much better–$ 40 a barrel– yet due to weak demand inspite of more than adequate supply, seems like oil-based economies such as Russia, OPEC members and Brazil, would have to wait for more better days as global manufacturers slowly recover from this economic slowdown.
“Demand is down. Supply is up,” said Robert Yawger, director of energy futures at Mizuho Securities in an interview over at CNN.COM. “The economic laws of survival are being violated on both ends of the spectrum.”
Bloomberg meanwhile reported that Saudi Arabia made a panicky move when it slashed its official price to Asia and the United States. Yawger says this just tells us to expect a major shock anytime soon as oil exporting countries have now punched the panic button.
Russia and Saudi Arabia have been competing in months yet both realized that there is a shrinking market out there. Several big countries have re-opened their economies yet because of the evident fear yet of air travelers to use planes–demands for jet fuel remain dismal.