Welcome to the great oil panic of 2020. I have no idea what is next, but it does not seem to end in 2020.
I wanted to learn a little bit more about the oil market so I called my friend and Alan Shurr over in Florida. Alan lived around the world for 30 years trading physical oil mostly for Glencore.
It is hard, even for Alan, to put the demand shock of this oil trade in perspective. There are 100 million barrels a day of physical oil moving around each day for consumption so when demand drops 20-50 percent for a few months, chaos can ensue as it did yesterday with negative prices for oil. Models were built for 2-3 percent fluctuations in demand. Talk about a supply chain that was comfortable!
I think you will enjoy the conversation and get a better understanding of the complexity of the problem. You can listen here.