Huge drop in crude oil price- "Negative price dilemma"

COVID-19 lockdown has reduced global crude demand by about a third.

Huge drop in crude oil price does not imply you pay less

Negative price means that investors holding the contract were unwilling to take delivery of oil and incur storage costs.

As drinking water is cheaper than crude oil in some countries, a rare truth to accept.

Currently, the United States (US) is the top oil-producing country in the world with an average of 17.87 million b/d (barrels per day) which accounts for 18% of the world's population.

The US working storage capacity is at 653.4 million barrels and due to the spread of COVID 19 pandemic from the mid of January 2020, the oil storage capacity of the biggest oil-producing companies of the US  like ConocoPhillips, EOG Resources could run out in May. (i.e- overflow)

This is the reason why oil producers in the US are paying buyers to take the commodity off their hands over fears that the storage capacity could run out.

Will we get oil for free?

Yesterday i.e- on 21st April 2020 oil prices went negative to a bizarre price of negative $37.63 per barrel. This would only benefit big oil-importing nations such as India, China, and Germany as these nations could get some relief at prices as they import huge crude oil from the US, Saudi Arabia, etc.

So basically, this clarifies that only huge oil-producing countries like the US, Saudi Arabi can provide their citizens with free of cost oil if the COVID 19 pandemic does not come to an end soon.

This current sharp fall in oil prices is taking place against a backdrop of weak global growth not only for oil-producing giants but also for the entire world.