What negative oil price means for Permian Basin
The price of oil fell to a record nearly
. What does the historic collapse mean for the Permian Basin?
Originally, CBS7 called world renowned energy market expert Anas Alhajji to talk about the price of oil taking a historic tumble down to $11 per barrel Monday morning.
About five minutes after that conversation ended, Alhajji called again because the price had fallen an additional $3 in that time.
“The decline we have right now is historic,” Alhajji said before noon, when prices were still around $8 per barrel. “If we close today around $8 like it is now, it will be the lowest closing of WTI in history.”
Was it ever.
The falling prices blew well past $8 and then $0, as traders gave up expiring May contracts for negative prices.
“I think everyone is in complete shock,” Alhajji said when the market closed. “I think everyone is numb. It just shows that there are traders who got stuck and they had nowhere to go and they had to sell those contracts at any price.”
Alhajji maintains that the biggest challenge facing Permian Basin producers remains the near-nonexistent demand for oil.
“Production proration in Texas and whatever people are trying to do with the Texas Railroad Commission is not going to help,” Alhajji said. “Because of the decline in demand. If people are trapped in their homes, whether gasoline prices are five cents or five dollars, it doesn’t matter.
Speaking of gas prices, they likely will continue fall, but don’t expect to be filling up for free.
“The impact on gasoline prices is very limited,” Alhajji said. “This is a financial issue. These are paper barrels. It’s only for today and tomorrow, and then it’s over. Then we go back to June contract, which is basically around $20 and above. So we go back to the normal life we’ve been having the last few weeks.”
Normal would be good, because today’s crash was anything but.