Most important for the global economy raw materials are in serious trouble. In just 11 days of March, oil prices fell almost from $ 50 to $ 20, breaking the market range. The coronavirus was spreading at an alarming rate, and the country had entered a deep freeze. This killed the demand for everything from diesel to aviation fuel. Then came April, and oil has received new blow. According to some estimates, consumption decreased by one third, as the world entered into a deep recession. Oil was so much that the store was crowded. And then the unthinkable happened. 20 April prices fell below zero, and the sellers were willing to pay to buyers, only to sell arms to unnecessary oil.
May brought some relief. It seemed that the worst of the decline in demand is behind us and in China with Germany again appeared tube. The country began to loosen the restrictive measures, and this gave an impetus to consumption. At the same time, Saudi Arabia, Russia and their friends in OPEC began an unprecedented restriction of output, which helped to reduce the glut in the market. Prices also crept up since the end of April, and on may 18, arrived in new York to $ 30 per barrel. However, the magnitude of the decline was so great that the recovery process will be long and slow. Someone doubts that oil will ever return to pre-crisis level.
Here are some numbers:
— 37,63 dollar
Price at market close on 20 April for a 42-gallon barrel of WTI. The price of oil first began with a minus sign.
29 million barrels per day
Reduced consumption of oil in April, according to the International energy Agency. This is one of the worst months in history.
The reduction in the number of working U.S. oil rigs for two months on may 8. The data of the company “Baker Hughes” (Baker Hughes).
Why is it important
The oil market is important for all sectors of the global economy. The decline in prices has become such a powerful impact on the budgets of oil-producing countries that in early April they began hasty action by making it a month later after OPEC and its allies abruptly interrupted long-term partnership. Interfered with the President, Donald trump, who demanded that Saudi Arabia and Russia to end the quarrel and restore oil prices since the closing of the company threatened thousands of jobs in the United States.
It was a sign that these are unusual times. America, have long been believers in the free market, suddenly thinking about voluntary production cuts. Trump initially praised cheap oil and gasoline, but then almost ordered the global manufacturers to help to raise prices.
Demand for oil this year is a record decline.
The rise will start from a very low level, and the industry have a very difficult time. In a global economy there is a historic decline, and Britain faces the worst for more than three centuries a year. Very much affected airlines do not expect a quick recovery, because the demand will still be low. And yet it cannot be excluded that the weakening of the requirements for social distancing will lead to the return of coronavirus, and with a vengeance, and then repeat all the horrors of the last two months.