OIL PRICE CRASHES
OIL PRICE CRASH Everyone would agree that Crude oil is almost an essential commodity in modern times. But many couldn't believe that crude oil could sell at negative rate. Well to explain what happened ? how it happened? i am writing this blog. In fact, there have been instances of commodities being sold at negative prices. For instance, bonds have been known to have negative yield, in which a bondholder makes a loss by lending money. First,lets look at how is oil priced. How is oil priced? The first thing to understand is that, even before the COVID-19 outbreak induced lockdowns across the world, crude oil prices had been falling over the past few months. They were close to $60 a barrel at the start of 2020 and, by March-end, they were closer to $20 a barrel. The reason was straightforward : Too much supply and too little demand . Oil prices are controlled by traders who bid on oil futures contracts in the commodities market. Tha...