Because of the global supply glut of oil due to the Coronavirus / Covid19 and many OPEC nations still pumping millions of barrels out of the ground, there are few places to store oil these days. There is also a price war between Saudi Arabia and Russia going on, so that added fuel, no pun intended, to the fire.
Currently the June contract for oil is sitting at $15.70 (Crude Oil Futures). Gas prices dropped to a 10 year low. The United States Gasoline Fund dropped to 10 year lows last month at $8.19 and have since rebounded to $11.31 ($UGA).
According to Robert Yawger, director of energy at Mizuho Securities USA, "Supply is threatening to overwhelm storage in coming weeks, and the flood of crude oil shows no signs of abating. It tells you that storage is fully accounted for and if you want to take delivery of oil you better have a place to put it or a pipeline to put it on, or otherwise you’re really screwed,” he said.
The oil glut is likely to continue for the foreseeable future with low demand and less people driving gasoline powered cars.
Low oil prices are here for a while and at some point down the road oil futures contracts should start to stabilize a bit.
