Oil collapse pushing inflation rate down
With demand for fuel down by 60% or more, four of SA's refineries have shut down
If you're not in the oil industry you may never have heard of Cushing, Oklahoma, population 7,000. The US town is the world's largest oil storage-tank farm, where multiple pipelines meet. This week it was at the centre of a historic moment when the oil price went negative.
With the Covid-19 disaster having shut down much of the world economy, demand for oil has collapsed and Cushing began running out of storage. Traders who had bought oil forward for delivery in May were so reluctant to take physical delivery they were willing to pay people to take it away. This was why the price of West Texas Intermediate for May 1 delivery briefly plunged to minus $40 a barrel...
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