1. Can oil prices veer into negative territory?
The substantial increase in oil supply without requisite demand has disrupted the supply chain because of which the space for storage of oil is filling up. This could result in a situation where we may not have adequate storage facilities and companies may have to soon pay to get rid of their oil. Therefore, there does exist a possibility of negative oil prices over the weeks ahead as we run out of space on land and at sea to store all the oil being produced at present. With limited flights and the imposition of lockdowns over the next couple of months, oil producers may have to curtail production.
2. Why are countries not curtailing supply?
At the core of the present movement in oil markets is geopolitics, with Russia not agreeing to production cuts primarily because it wanted to hurt US shale producers.
