U.S. Oil Market Trades Below ZERO! April 2020
April 20, 2020: For the first time ever, oil has traded below zero. The May contract for U.S. West Texas intermediate crude oil absolutely crashed to a low of -$38.08 during trading on Monday. As of this post, the price had corrected upwards to approximately $1.00 a barrel.
The price of international Brent crude fell to $26.60 a barrel. Brent crude capacity is not land locked as is the case in North America.
The oil price war between the Saudis and the Russians has not helped the matter either. You can bet both of these actors are watching the current situation carefully.
As a result of COVID-19, demand for oil and gas has decreased. Supply has increased to the point where there is essentially no place to store the oil in North America.
The oil storage facility in Cushing, Oklahoma is filling up fast. It is estimated the facility can hold around 85 million barrels. This is the key storage facility in North America.
The global economy is experiencing first hand the result of a lack of working and the free flow of commerce. People around the globe have been shut in their homes because of the COVID-19 coronavirus. Without economic demand, prices are falling.
The ripple effects of this move merit watching. Soft commodity food prices are on the verge of breaking lower as well. The idea of cheaper costs sounds good in the short term.
But eventually, producers and suppliers will cut back their production. And this will lead to an inventory squeeze, a spike in prices and ultimately inflation.
With the opening of the third seal in Revelation 6, John speaks of a time when it will cost a day’s wage for food. About 2,000 years ago, a denarius was a day’s wage for labor. Remember this is looming at some point in the future… A day’s wage to eat.
The dollar is breaking to higher levels against the currencies of the world. Will a strong US Dollar lead to the scenario of hyperinflation described in Revelation 6?
Revelation 6:6 And I heard what seemed to be a voice in the midst of the four living creatures, saying, “A quart of wheat for a denarius, and three quarts of barley for a denarius, and do not harm the oil and wine!”
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