April 21, 2020

The Price of Oil Didn’t Fall to -$40 Yesterday

Sure, that looks like a lot of storage. But it's mostly already spoken for.Shane Bevel/ZUMAPRESS

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We’ve all had our fun, but after watching the evening news today I have to ask: Everyone knows that the price of oil didn’t really fall to negative $40 yesterday, right?

All that happened was that the price of one particular futures contract fell below zero. This contract comes due on Tuesday and requires the buyer to take physical possession of the oil. Unfortunately, thanks to the COVID-19 oil glut, there’s little storage available and its price has skyrocketed. Under these extreme conditions, taking delivery of the oil and buying storage for it would be a guaranteed huge loss. This caused many investors and speculators to panic and dump their contracts at any price—even if they had to pay someone to take it off their hands.

Anyway, that’s it. The price of one particular futures contract, late in the day, was a victim of panic selling. The price of oil in general was largely unaffected. It’s still dropping, mind you, but not in any kind of dramatic way.

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This is no time to come up short. It's time to fight like hell, as our namesake would tell us to do, for a democracy where minority rule cannot impose an extreme agenda, where facts matter, and where accountability has a chance at the polls and in the press. If you value our reporting and you can right now, please help us dig out of the $100,000 hole we're starting our new budgeting cycle in with an always-needed and always-appreciated donation today.

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