Why The World Is Still Pumping So Much Oil Even As Demand Drops Away
The ongoing pandemic means the world is using far less oil. But pumps are still going, creating a huge oversupply. Companies are often willing to operate pumps at a loss — for a little while.
With the global economy in a pandemic-induced coma, the world just doesn't need a lot of oil.
But oil's still flowing out of wells, and with nowhere else to go it's filling up the world's storage tanks. The oversupply is so intense that this week U.S. oil prices briefly went negative.
But why is that oil still flowing, anyway? Why don't producers turn off the spigot when demand falls?
The short answer is that production decreasing — just not fast enough.
