if you think about the price of all is a
gauge of economic health or we know that
globally economic health has been
decimated by the corona virus pandemic
demand has really fallen off a cliff and
so too with it the amount of oil the
amount of energy that's needed to fill
the world's factories the supply chains
that carry all our goods all around the
world that power our businesses that too
has tumbled the problem is the major
oil-producing nations continue to churn
out millions of barrels of this stuff
even though demand was clearly falling
they didn't react to that that has led
to a glut and whenever you have a glut
of anything demand and demand is falling
then price is also tumble and that is
what is happening here making matters
worse if you recall a couple of weeks
back there was a spat between Russia and
Saudi Arabia two of the biggest
producers neither side would give in and
both sides ended up producing even more
oil then last week President Trump in
fact rarely to his credit did manage to
step in and produce a deal managed to
get Russia and all the other major
oil-producing nations to agree to cut
production including the US because
don't forget the US has also become a
major oil producer too but the problem
is those cuts millions of barrels a day
have not yet kicked in and what you've
got now is worries that the amount of
storage for all this oil that's sloshing
around the system is imminently going to
run out particularly here in the US that
has caused this major price crash today
two levels below zero so effectively
you'll have producers begging buyers in
fact really in negative price territory
they will have to pay buyers to take the
oil off their hands this is an
unprecedented situation oil prices
always suffer during economic crises
they always tumble never before have
they fallen this low never before have
they fallen into negative territory and
that really underscores kathie the
extent of the crisis that we
in here and again I say this all the
time and don't mean to sound negative
but there are no signs really that the
global economy is going to pull out of
this crisis anytime soon shevawn in
washington DC thank you very much for
joining us
what Kati Marton is the markets editor
for the Financial Times and joins us now
from her home in London Katie you
probably listened in to Siobhan just
then I mean how extraordinary is this in
your view Katie oh this is I mean we've
had a really rough run in markets over
the past few weeks but this this is
quite something the oil market that's
never seen anything like this before at
the world's point this particular
contract for oil was trading at $40
below zero which means not only our
producers paying people to take the oil
off their hands they'd pay a fair chunk
to have people take this all off their
hands too now guess there are some
market technicalities here around what
types of oil from which parts of the
world are capable of being stalled in
particular locations but the big picture
here is the demand for oil has just
completely collapsed as a result this
pandemic all those airplanes that have
been grounded all those car journeys
that we're not making anymore all of
those factories that have been shut down
but it just absolutely destroys demand
for oil around the world and there's
just too much of the stuff and nowhere
to put it in certain places well what
does happen to this excess oil in well
we're just going to have to find a way
to cut down production somehow I mean
unless there's a huge spike in demand
anytime soon it's difficult to see this
situation going away so yes this is
affected a very particular contractor
oil is a particular US contract but
unless there is a surge in global demand
it's very difficult to see how this goes
away even the Brent oil prices down
about 9% today which would be a big day
for oil if it hadn't been for this
collapse in the US so what are the
implications for the industry but also
for the economy as a whole for the
industry this is really challenging for
those US shale oil producers which have
kind of sprung up from pretty much
nowhere over the past few years and
they're now one of the biggest suppliers
of world
the world it's helped make us want the
world's major suppliers this is going to
be extremely difficult for them a lot of
them and loaded up with loss debt it's
gonna be difficult to see how they're
going to pay it back this has been one
of the big concerns that's been gnawing
away at market ever since markets
started collapsing as a result of this
pandemic is what's going to happen these
shale oil producers can they handle oil
at these levels nobody can handle oil at
these levels now when you look at oil
prices these particular or Christ's in a
couple of days they're going to look
very different because this is a
particular contract the delivery of oil
in Maine and there should be some more
capacity in June this is a market in a
mess Kati Marton thank you very much for
joining us