The Magic of Negative Prices!
The law of demand and supply: you have over supply as demand is dropping, you expect price to drop. It is happening in electricity where some European cities are seeing negative prices of electricity. That means, the producers are essentially paying customers to use power. Of course, the customers do not need the power because they are hibernating at home. "Belgian and German utilities saw electricity prices plunge to as much as negative €90 (-$97) per megawatt/hour. Cheaper-than-free is nothing new for the electricity sector, but these price falls are truly historic, the Wall Street Journal reports . It’s not some market quirk. Demand has crashed in recent weeks with factories and businesses shut down." (Fortune(
Focus in closely and oil prices turned negative this week because of technicalities in the futures market and storage capacity in Oklahoma. But zoom out and negative oil prices are merely the weirdest illustration of the destruction of demand in the economy—and fit with two longstanding negative prices in Europe, for money and for electricity.
In all three cases, the problem is that supply can’t respond quickly to changes in demand, while demand can’t or won’t increase quickly enough to take advantage of lower prices.