The May futures contract of West Texas Intermediate (WTI) crude fell into unchartered territory on Monday, with sellers willing to pay buyers $37.63 a barrel to take delivery. Who gains from low oil prices?
3 beneficiaries of low oil prices
2# Countries running oil deficits will benefit too. India’s bonds are expected to outperform according to JPMorgan and South Africa is expected to see some pressure ease on their foreign debt levels as the Rand gains strength. On top of these countries, the larger oil importers will benefit too. Many of the larger nations have used the low oil prices as good times to top up their reserve level, so the consumer benefit will also be mirrored by country benefit too.
3# Corporations will gain from lower oil prices. Many companies use oil at some point in their production process, even if it is only to transport goods to the market. Many of these companies will benefit from a reduction in their oil bill.
So, a few of the likely winners even as some pretty hefty losses are on their way for many oil giants. This has been a week to remember for the oil market as demand continues to dry up.
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