The volume of oil held storage is rising sharply as demand is at almost zero in a world locked down by the coronavirus,
Monday U.S. crude oil prices took a freefall, dropping by almost 300 percent to a new low of minus $37.63 by the close of the oil market.
At this price point producers will basically be paying buyers to take the excess oil off their hands, with travel and industry slowed to a trickle do to social distancing lockdowns. Tanks, ships and pipelines are almost full, according to industry experts, complicating the situation for many producers who want to hold on to their product until social distancing is lifted and they may get a better price for their oil.
“Even if we get the COVID-19 shelter-in-place protocols lifted by April 30, and we start to see some pop in demand, you are going to have so much oil sitting in tanks that, regardless of production cuts, you are still looking at a massive glut of oil going into the third quarter,” says Stephen Schork, founder of The Schork Report energy newsletter.
With a budget based on the price of oil, lawmakers find themselves in undiscovered territory as near every sector of the State's economy is reeling while the need for many services is increasing. The Alaska State Legislature is still within its 120 day session, although it has been in recess since March due to COVID-19 concerns.