LUBBOCK, Texas – Oil prices fell on Monday to the point where WTI or West Texas Intermediate fell to zero dollars per barrel. Then it fell to below zero.
“US oil futures were down below $0 a barrel, their worst level since NYMEX opened oil futures trading in 1983,” CNN reported.
BREAKING: WTI crude oil futures trade at negative price for first time https://t.co/pOSyH6AVtP pic.twitter.com/XsoH1jG8WH
— Bloomberg (@business) April 20, 2020
“These are unprecedented times even for the industry where you see bell curves that are expected in the industry,” said State Senator Pete Flores, R-Pleasanton, in a phone interview with KXAN.
He added that the pandemic has a significant reduction in demand for the product across the board- which is a recipe for disaster.
“…At the beginning of the of this event of the pandemic, I [spoke] at a forum in Medellin to the pipe liners. At that particular time, the primary issue that was affecting the market and causing it to to [have] some some negative consequences was the play with the Saudis and the Russians on the oil market, trying to, you know, to put pressure on American oil,” said Flores.
Other types of benchmark oils also dropped on the markets on Monday, but WTI was the most noticeable.
West Texas Intermediate sometimes trades lower than Brent or other benchmarks.
Any industry that experiences this situation for any length of time would immediately be out of business and have to give away their products if this continues, said Allan Frizzell, an Abilene oilman.
For Abilene, significant job losses in the service industry were experienced already even before Monday, including drilling contractors, well service contractors, as well as production and operators in the area.
“We’ve really had a lot of job losses,” said Frizzell. “So, I hope those come back some day. It’s just the result of the negative change in the job market like this.
He said their rig count was down to almost nothing by Monday.
“Maybe one or two rigs are operating,” said Frizzell. “It hurts me to say that. We’ve gone from 10 to 12 rigs operating to one to two rigs operating. That’s the loss of 250 to 300 jobs right there. That’s the drilling industry.”
As for the Lubbock area, he said the Permian Basin is going to be in a state of chaos.
“Lubbock has some of that carryover,” said Frizzell. “They’ve had more revenue there. Midland/Odessa is going to be the worst. West Texas will definitely be hit hard.”
Although he remained positive, he thinks it will take three to six months with a return to a healthy, working, vibrant economy with transportation, the use of electricity and oil around the world.
🎥As the #oil market hits a historic low— Texas producers and industry workers are now left scrambling. Hear from some of them + read the response from regional lawmakers (@kseliger, @PeteFlores_TX, @BrooksLandgraf).
— Wes Rapaport (@wesrap) April 20, 2020
Coverage w/ @maggie_glynn1: https://t.co/yD7pIC0bIA#txlege pic.twitter.com/SE7tRDDywz