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Due to the pandemic of COVID-19 in the U.S., the price of U.S. crude oil contracts...

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Economics

Due to the pandemic of COVID-19 in the U.S., the price of U.S.crude oil contracts for May 2020 delivery has turned negative forthe first time in history. For instance, West Texas Intermediate(WTI) crude oil contracts for May fell 301.97 percent to -$36.90per barrel.
State your understanding of this phenomenon and carefully explainyour arguments with economic tools and/or economic intuition,including the aspects of
1.   demand for oil by households;
2.   demand for oil by non-household demanders, such asmanufacturers;
3.   market supply of oil;
4.   equilibrium price and quantity.

Answer & Explanation Solved by verified expert
3.8 Ratings (553 Votes)
While there is lower demand due to the virus and definitely lower demand results in lower prices the prices going below zero is because of many aspects which are specific to the oil industry First lets see the demand side It is clear that due to lockdown the demand of oil by households    See Answer
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