What's going on?
My "oil prices" widget (Dashboard on the Mac OS) shows:
34.88 (perhaps it can't show "negatives")
But if I search for "commodities prices" on the web, it shows:
-35.70 (that's a "minus" sign out front)
Are prices really down to -35 or so right now?
How can this even work...?
Maybe it's time to suspend trading for a while...
This is a local anomaly. A producer has put forth the investment to create a setup where a continuous stream of oil comes out of the ground and is handed over to buyers in a competitive market. When buyer demand increases, the price goes up. When demand falls, the price goes down. The producers anticipated that demand would remain near a certain level, and that they could engage in a continuous operation to transfer their oil to buyers.
But now local buyer demand has fallen. There are no local buyers wanting their oil. Sure, there are buyers in Deer Park, Port Arthur, Pascagoula, etc. that would love to be paid to take this oil off their hands. But they are already pushing the limit with contract purchases and have no ability to gather Permian oil at the local level.
So you have these producers with oil continuing to come out of the ground afraid to suspend operations (and the high cost that goes along with that) and who are hoping this is just a temporary glitch. So instead of simply dumping oil out on the ground (which they used to do over a century ago), they pay people to save them the cost of an environmental catastrophe.
It all comes down to supply and demand, and the ease with which one can enter/leave the market.