Why Are Oil Prices So Low?

Benchmark US oil prices have gone negative for the first time in history as the decrease in demand continues due to the recent series of economic events. Due to lockdowns, we currently have very low demand and high supply.

Now what does this mean for US Oil companies? If oil prices stay this low, many oil companies will go bankrupt. Now if the lockdown extends and there are several waves of rona that hit the economy, the oil industry has a big problem. This will likely mean that prices will have to remain very low for months, which will cause many oil companies to go bankrupt because there is a lot of leverage in the oil industry right now. High leverage means that companies have a lot of debt and if oil prices stay low, these companies cant make the money to pay their debt and they will go bankrupt.

Oil prices will stay low for probably atleast a couple of weeks, but this doesn’t mean your gas will be free. Yes, the price of oil makes up about 50% of the price of gasoline but there are many other costs that are included in the cost of gasoline, such as transportation, refinement, and tax. But you probably wont be paid to fill up your car.

Видео Why Are Oil Prices So Low? канала Invest In You