the

10 Reasons the OIL PRICES Are Going DOWN

welcome back a Luxor's depending on

where you live in the world it might

have been a while since you last started

your car hopped onto some form of

transport or flew in an airplane with a

global demand for fuel at an all-time

low what does that mean for the price of

oil in the 19th and early 20th century

the price of oil was fairly consistent

since the 1970s there been spikes and

drops for various reasons and 20/20 has

seen a massive drop due to low demand

and a lack of storage space for the

first time in history on the 20th of

April 2020 US oil prices went below zero

and settled at minus thirty eight

dollars a barrel a Luxor's let's find

out ten reasons why oil prices continue

to drop and how it affects all of us

welcome to a lox calm the place where

future billionaires come to get inspired

if you're not subscribed yet you're

missing out number one let's compare the

price of oil today and twelve months ago

oil plays a huge role in the global

economy there are three major factors

that influence the global price of oil

supply demand and geopolitics the first

commercial oil was drilled in azerbaijan

in 1847 and was mainly used for oil

lamps and kerosene

fast forward to 1901 and the first well

capable of mass production was drilled

in southeastern Texas it wasn't long

until oil replaced coal as the go-to

fuel source speculators hedgers or

traders and investors play a huge part

in determining the price of oil as of

april 29 2020 west texas intermediate or

WTI rose 18% to 1457 a barrel and

international benchmark Brent crude rose

5% to 2389 a barrel in April 2000

nineteen Brent crude was 7123 a barrel

but we should note that these prices

fluctuate constantly and may gain or

lose by the time of this publication

it's estimated that this time last year

the global oil demand was averaging

around 99

point nine million barrels a day

compared to 77 point six million today

this was the estimate brought forward by

Magnussen obscene head of analysis at

Rice NAT energy number two

demand for oil is at an all-time low the

outbreak of the corona virus has had a

huge impact on every sector possible and

oil is at a point of too much supply

with not enough demand we use oil to

fuel cars trucks airplanes trains and

ships it literally moves our world and

the byproducts are used for many reasons

including the production of chemicals

plastics waxes tars and lubricants there

are differing reports on how much oil is

needed for vehicles to run but the

general consensus is between 65 and 70

percent which was specific to

transportation in the USA with a

significant drop in people driving their

cars worldwide or needing public

transport to get from point A to B there

are far fewer people filling up their

tanks and the same applies for the

airline industry kovat 19 has dropped

the need for oil to an all-time low

which brings us to number three storage

space for oil is running out one of the

main problems with the lack of demand

for oil is that storage space is running

out fast it's not as simple as to just

put a stop to production of oil if the

wells are capped there could be

long-lasting damage and it's extremely

expensive to do this some experts

believe that production needs to drop to

alleviate the need for storage so here's

what the Organization of Petroleum

Exporting Countries or OPEC suggested

should be done and what transpired since

that suggestion crude oil is stored in

tanks and on tankers and globally

there's space for 1.2 billion barrels of

oil to be stored it's not recommended to

fill the tanks and tankers to the brim

and according to sources in the industry

there are already 80 million barrels in

floating storage oil tankers are

thinking of different places to store

their oil and are looking at rail cars

pipelines ships and caverns in

Scandinavian countries the salt caverns

are already fully booked

number four there are tensions between

Russia and Saudi Arabia OPEC which we

mentioned earlier was formed in 1960

when some of the world's major oil

exporting nations came together to

manage the supply of oil in an attempt

to set a standard price on the world

market and avoid massive fluctuations

which would affect economies OPEC is

responsible for one-third of the world's

oil supply Russia America and China were

not a part of OPEC in 2016

Russia and Saudi Arabia formed the OPEC

plus Alliance Russia was the biggest

non-opec player in this alliance and the

world's third largest producer of oil

after Saudi Arabia when it was suggested

to cut oil production originally Russia

and Saudi Arabia decided to cut by two

point 1 million barrels a day but Saudi

suggested they increased that number to

3.6 million to compensate for the

current weaker consumption Vladimir

Putin didn't agree as his concern was

giving too much ground to America

already the number one producer of oil

in the world and stated that countries

should produce as much oil as they

pleased after a recent meeting Russia

decided to leave the alliance and Saudi

Arabia have issued a stern warning to

Russia that it's a decision they will

regret with this price war waging oil

stability remains very fragile

number 5 the oil price collapse will

reshape many things it's uncertain how

Saudi Arabia and Russia will fare after

their inability to come to a mutual

agreement on lowering the production of

oil what is certain is that the price

war will mean that many smaller oil

producers in the US will go bankrupt it

also effects climate change with lower

oil prices policymakers and business

leaders may not make the switch to

renewable sources of energy it won't be

financially viable of course there is

another point of view that the oil

industry is an unreliable investment it

will also influence geopolitics for

example oil dependent countries will

really struggle with a low demand for

oil and we'll explain how exactly

they'll be affected net

number six here are the countries that

will be most affected by the lack of oil

demand every country worldwide is

affected by kovat 19 in the dropping

price of oil

however countries that will pay the

heaviest price are oil dependent ones

they include Iraq Libya Iran and

Venezuela who all struggled with

conflict uprisings and sanctions over

the years Russia has claimed to be able

to withstand oil prices ranging between

25 to $30 a barrel for up to 10 years

but Saudi is not that flexible Nigeria

is having a tough time as they rely

heavily on oil and gas which brings in

over 90 percent of their foreign

exchange earnings and that's under

severe threat right now Nigeria is

battling to find buyers for 55 vessels

full of crude oil output other countries

that cannot balance their budgets now

include Iraq Oman Angola Suriname a-and

Gabon it's also been predicted that

Canada and the US may see a recession

and Mexico may have its credit rating

downgraded further every country around

the world will feel the impact of the

dropping price of oil number seven this

is how the drop in oil price affects us

in some places consumers around the

world may see certain products being

less expensive for example motor oil

clothing plastics ink solar panels and

floor wax all items that use petroleum

should ultimately be cheaper fuel might

be marginally more affordable but with

travel limited it hardly benefits us all

products should also on paper come down

in price as the cost of getting them

from a wholesaler to retailer will be

less if this happens it could mean

consumers buy more and there's real

growth in the GDP sadly on the other

side of this pretty picture there are so

many people without work due to the

pandemic and it's predicted to get worse

the UN labor body estimates that there

will be a loss of 6.7% of working hours

globally in the second quarter of 2020

which accounts for roughly 195 million

jobs around the world other estimates

were less grim but likened the

unemployment levels to be higher than a

great depression

number eight could you buy oil and just

store it for resale if you thought it

might be possible to stock up on oil and

then resell it we've got some bad news

it's just not doable and this won't work

as your backup plan oil is sold in bulk

so even if you could theoretically store

a few barrels of oil no one would want

to buy it from you if you could

potentially store thousands of litres of

oil you'd have to consider a few things

firstly you'd still have to pay a

considerable amount for it despite the

price drop it's not really the case that

you'd be paid to take the oil off the

distributor's hands despite some reports

of that being a thing secondly you'd

have to pay to get the oil to its

storage you're probably thinking but I

have thousands liters of oil so can't I

just use that for fuel to transport the

oil well the crude oil still needs to be

refined into fuel which involves heating

the oil until it boils and separating

different gases and liquids to make the

fuel and that's a whole other process

thirdly

you'd have to pay for the storage of the

oil there would be licenses involved

because storing large amounts of oil is

a fire hazard and the fumes can kill you

crude oil is said to have a terrible

smell and the fumes are potentially

toxic basically unrefined oil is

impractical to buy and despite being

referred to as black gold cannot be

turned into profit easily stick with us

we'll share a story in a bit about

someone who tried to obtain a barrel of

oil and sell it for profit

number 9 many believe it's a great time

to invest in oil stocks so storing

actual crude oil isn't quite the

investment you need at this stage a

lexer but what about shares in oil

stocks as of Wednesday the 28th of April

2020 several oil related companies arose

more than 10% seeing several young

investors jumping on board what they

believed to be the opportunity of a

lifetime

SM Energy Matador Resources wpx energy

and PBF Energy were all companies that

went up by 10 percent or more although

many stocks have fallen enormous ly

Millennials are seeing it as an

opportunity to buy cheaper shares that

would usually not be available as an

intrepid adventurer you're advised to

just tread lightly around oil stocks and

stay focused on those stocks

likely to survive a downturn number ten

what does the future hold for the oil

price it's not a clear-cut answer but

there's a lot of speculation some

experts believe they'll be a major

comeback for oil where it could reach

$100 a barrel with the possibility of

less oil being produced and the world

rallying around sooner rather than later

there could be a high demand for a

commodity that would potentially have

less availability it would be exactly

the opposite of what we mentioned

earlier with high supply and low demand

but until that happens if it does let's

fill up our tanks and enjoy the small

respite of high gas prices

well a Luxor's here we are at the end

when do you think the oil price will

stabilize once again what role do you

think the drop in oil price will play in

the society we value your insight so

tell us your thoughts in the comments

and of course for sticking with us until

the end here's your bonus remember how

we said it wasn't feasible to buy and

try to sell a barrel of oil

well Bloomberg's Tracy alipay tried to

obtain a barrel of oil and store it in

her apartment she soon discovered that a

barrel of crude oil needed a specific

place to be stored one with lots of

ventilation because the fumes were toxic

so her idea of making a profit on oil

changed quickly when she opted for a jar

of Brent crude oil instead the oil

smelled like rotten eggs and after all

of her efforts to obtain the jar with

many trying to talk her out of it she

would have only made seven cents profit

and that doesn't include the time it

took her to source the oil fetch it

bottle it and make sure it was stored

safely and securely she may not have

gained a barrel of crude oil but she

certainly got a great article from hit

thank you for spending some time with us

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