There’s a HISTORIC crash going on right now in the oil markets. Pay attention y’all: this matters and yes, it affects your money too.
I just did a double-take when I saw a headline from Bloomberg saying oil was trading at less than $2 a barrel.
BREAKING NEWS: Oil Market Crashes!
Thought the headline must be wrong or have a typo?
Nope. It was correct.
But then, in the last few minutes, the crash in the oil market just got WAY WORSE.
We now have NEGATIVE oil prices — where oil producers literally have to PAY customers to take crude off their hands (as opposed to RECEIVING payments for oil).
Under these conditions, oil producers are likely going to be stuck with too much oil. So what will they do? They’ll have to pay someone to come haul it away — and then they’ll shut down oil production. Not good!
(P.S. if the idea of “negative” oil prices seems crazy to you, this kind of stuff isn’t just happening in the commodities market.
Remember when interest rates fell like crazy recently? There was a lot of buzz then about negative interest rates. When rates go negative, you literally have to PAY the bank to hold onto your cash, versus you COLLECTING interest on your money.
OK, so what does the oil market crash mean for you? Here are 4 immediate impacts of the oil market crash:
1) If you’re employed in the oil/gas industry, your job could be at stake. After all, many U.S. refineries will likely shut down and some may even go belly up (or at least need a bailout) because of this mess.
Texas (where I live now) is likely to be very hard hit.
2) If you’re employed by a company whose main clients are in the oil space, your job could be at risk too. Ditto for small biz owners in this category if oil and/or oil-related companies are your clients.
3) If you’re an investor in the stock market, there’s an opportunity here, with companies that will be storing oil … businesses like Diamond Tankers and Scorpio Tankers.
4) As a consumer, gas prices will also be lower. Not much practical good in that, for now, since most of us are under stay-at-home orders and we’re not driving much. Still, it’ll be cheaper to fill up at the pump.
No telling how crude oil/gas prices will respond in the future — if and when things “normalize.”
Lastly, for those of you wondering: what’s even happening or what is causing this?
Short answer: Russia and Saudi Arabia are engaged in a humongous oil-price war.
Again, pay attention … because the economic fallout from one market often has the effect of impacting other markets too.
The end result: there’s both crisis AND opportunity.
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