Oil prices fall below $0 a barrel as demands collapse

US crude oil prices plunged to a record low in history today as the market continues to be roiled by an epic collapse in demand due to coronavirus pandemic.

Starting at an already record low of below $5 late, the futures contract prices started trading in the negative within the hour.

The May US West Texas Intermediate (WTI) contract fell $19.06, or 104.3 per cent, to a discount of 79 cents a barrel at 2:09 pm Eastern Time, after touching an all-time low of -$1.43 a barrel. Brent was down $1.85, or 6.6pc, at $26.23 a barrel.

Oil Prices Plunging Down in the Global Market

The May delivery contract is close to expiring so it was seeing less trading volume, which can exacerbate swings. However, prices for deliveries even further into the future, which were seeing larger trading volumes, also plunged.

On April 10, the storage at Cushing, Oklahoma, the heart of the US pipeline network, was nearly 72 per cent full, according to the US Energy Information Administration. Despite the fall in May futures, the June futures continued to trade above $20 per barrel on Monday. The crude oil prices depend on demand, quality and supply.

Pakistan Oil Refineries on verge of closure

The unprecedented drop in the nearby contract reflects traders scrambling to exit long positions that would require them to take physical delivery of crude amid dwindling storage space. It also reflects a convergence with the physical spot price for oil.

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