U.S. Oil Supply Special Report
Overflowing Oil Supply to Reshape Energy Sector; Real Estate Faces Local Effects, but Some Benefits Will Emerge
Oil demand tumbles under quarantine, sending prices negative. The global health crisis has idled factories and stalled businesses, leading to a historic fall in oil consumption at a time when production was at an all-time high. Petroleum consumption in the U.S. dropped to its lowest level in 30 years in early April, while demand for gasoline was cut by almost half from mid-March. Years of investment and high debt loads for U.S. producers left them reluctant to shut wells and stop pumping, while cuts made by OPEC were too little and too late to slow the oil rout. Demand has contracted much faster than supply has, leaving storage near capacity and driving prices to record lows. Western Texas Intermediate futures briefly dipped below zero on April 20 as oil demand significantly dropped due to lockdown measures. Pricing has since gained traction with the spot price pushing $36 per barrel, still down from upward of $60 per barrel at the start of the year. Lower prices typically trigger savings for U.S. consumers and fuel-burning businesses, though as quarantines continue across the nation, many are currently unable to benefit.