West Texas Intermediate oil prices have gone negative in a record low for the US benchmark as the market continues to crater amid the general economic collapse.
Vanishing demand and a glut of supply have combined to heavily impact the US benchmark fuel, with prices dropping from $18.27 to close at -$37.63 a barrel on Monday – down over 300 percent from the previous day’s close. It’s the first time the oil futures contract has ever traded in the negative since the New York Mercantile Exchange (NYMEX) started trading crude oil futures in 1983.
The collapse in oil markets comes amid a generalized economic downturn, with the coronavirus pandemic plunging most of the world’s economies into a downward spiral many believe will be the deepest since the Great Depression of the 1930s.
Global oil storage is currently reaching its limits, and while OPEC recently secured a 9.7 million barrel per day cut in production, the US Department of Energy is nevertheless weighing the idea of paying domestic producers to simply leave the oil in the ground so as not to further depress prices.
With May’s futures contracts set to expire on Tuesday, investors are scrambling to unload their positions, eyeing the already-glutted market and concerned about being left with a valueless commodity.
As the futures contracts hovered at record lows, oil tankers are reportedly languishing at sea, unable to find places to store their bounty onshore. Demand for the commodity has dropped an estimated 30 percent worldwide amid the coronavirus crisis.