Oil Prices Drop Amid COVID-19 Epidemic
Another consequence of the COVID-19 virus has been the spike in volatile liquidity, with countries like South Korea struggling with the USD. More recently, oil has become the latest asset to be affected by the epidemic.
Because of the virus and the consequences it has given rise to, the price of oil has dropped by half. January gave us the first sign of this massive drop as the coronavirus was slowly creeping out. Since then, demand has been on a steady drop.
Yet, this has been profitable for many brokers, as oil trades have increased, yet one cannot overlook the challenges that oil will face in the near future.
Aside from the current factor that has been influencing oil, namely the COVID-19, there is another facet that mustn't be ignored. That is the oil price feud between Russia and Saudi Arabia, with the latter increasing its oil production, and is so doing lowering the price. Both factors have increased the supply in a world were demand has seen a steady decrease over the last months.
As of writing this, the price of oil has shifted from $50 to around $20.
The global economy will continue to be disrupted by the current epidemic. One way to prolong this process, or even end it, is to estimate a date of return to normality, an endeavour that is practically unfeasible.