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

For indispensable reporting on the coronavirus crisis, the election, and more, subscribe to the Mother Jones Daily newsletter.

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.

DEMOCRACY DOES NOT EXIST...

without free and fair elections, a vigorous free press, and engaged citizens to reclaim power from those who abuse it.

In this election year unlike any other—against a backdrop of a pandemic, an economic crisis, racial reckoning, and so much daily crazy—Mother Jones' journalism is driven by one simple question: Will America move closer to, or further from, justice and equity in the years to come?

If you're able to, please join us in this mission with a donation today. Our reporting right now is focused on voting rights and election security, corruption, disinformation, racial and gender equity, and the climate crisis. We can’t do it without the support of readers like you, and we need to give it everything we've got between now and November. Thank you.

DEMOCRACY DOES NOT EXIST...

without free and fair elections, a vigorous free press, and engaged citizens to reclaim power from those who abuse it.

In this election year unlike any other—against a backdrop of a pandemic, an economic crisis, racial reckoning, and so much daily crazy—Mother Jones' journalism is driven by one simple question: Will America move closer to, or further from, justice and equity in the years to come?

If you're able to, please join us in this mission with a donation today. Our reporting right now is focused on voting rights and election security, corruption, disinformation, racial and gender equity, and the climate crisis. We can’t do it without the support of readers like you, and we need to give it everything we've got between now and November. Thank you.

We Recommend

Latest

Sign up for our free newsletter

Subscribe to the Mother Jones Daily to have our top stories delivered directly to your inbox.

Get our award-winning magazine

Save big on a full year of investigations, ideas, and insights.

Subscribe

Support our journalism

Help Mother Jones' reporters dig deep with a tax-deductible donation.

Donate