What Led Crude Oil Prices Fall Below $0 per Barrel

"Suddenly, because people expected a barrel to trade at $3 and not minus $37.63, and deliberately because the world is still making sense of the virus unleashed by China that throws a new surprise with every new day."

What is WTI?

WTI resembles a trading benchmark price for crude oil.  A benchmark crude serves as a reference price for buyers and sellers of crude oil across the world. While Western Texas Intermediate (WTI), the one trading in the negative, happens to be one, the other two are Brent Blend and Dubai Crude.

What is the reason, in short, for the declining oil prices?

In an ideal scenario, there are buyers and sellers, but recently, the sellers outnumbered the buyers. Therefore, the oil that was selling at $17 in the first hour eventually went into negative till the end of the day.

There are primarily three (3) reasons behind this;

1. First, the lockdown, that dented the demand for crude for refining.

2. The price war between Russia and Saudi Arabia resulted in OPEC members and other oil producing countries being unable to reach a truce in terms of oil output.

3. Decline in storage spaces. The consequences of exhausting storage space damages oil producers everywhere.

Why did this happened all of a suden?

Partly, the blame goes to China. As the world's largest manufacturing nation started lifting lockdown, it needed oil for automobiles and factories, so the demand for crude oil went in one direction, China was the only huge buyer of crude oil, while other countries, due to shutdown had no use of crude oil, hence their demand fell down.