US oil prices tumble into negative territory for first time

Oil prices ended New York trading in the negative on Monday for the first time ever, as a supply glut forced traders to pay others to take the commodity.

Oil prices have ended New York trading in the negative for the first time ever

With space to store oil scarce, US benchmark West Texas Intermediate for May delivery ended trading at -$37.63 a barrel ahead of Tuesday's close for futures contracts -- when traders who buy and sell the commodity for profit would have had to take physical possession of it.

"It's a contract for something that nobody wants to buy," said Matt Smith of ClipperData.

The unprecedented price drop is a consequence of the coronavirus pandemic, which has devastated the global economy by forcing billions of people to stay home to stop its spread, and an ongoing price war between top producers Saudi Arabia and Russia.

That price war contributed to an oversupply that drove crude lower, to the disadvantage of US shale producers.

A deal announced last week between OPEC and its peers would have lowered production by about 10 million barrels a day from May, but that's plainly not enough.

"There is no demand for gasoline and diesel fuel," said John Kilduff of Again Capital. "The demand has just plummeted."

Smith however noted that Monday's negative prices were a reaction to the storage shortage ahead of the Tuesday deadline, and once that passes, they should turn positive again.

"In two days, it will be gone," he said.

cs/sst

JOIN OUR PULSE COMMUNITY!

Unblock notifications in browser settings.

Eyewitness? Submit your stories now via social or:

Email: eyewitness@pulse.ng

Recommended articles

APC postpones screening of Tinubu, Osinbajo, other presidential aspirants

APC postpones screening of Tinubu, Osinbajo, other presidential aspirants

PDP primaries: I will wait as long as it takes – Banky W

PDP primaries: I will wait as long as it takes – Banky W

Abductors reject N1m ransom offer; seize cleric, son in Ondo

Abductors reject N1m ransom offer; seize cleric, son in Ondo

PDP suspends primaries indefinitely in Imo

PDP suspends primaries indefinitely in Imo

Tinubu pledges to establish agro industrial processing zone in Yobe

Tinubu pledges to establish agro industrial processing zone in Yobe

PDP primaries: Reps Minority Leader Elumelu wins ticket

PDP primaries: Reps Minority Leader Elumelu wins ticket

NDLEA arrests ex-drug convict with 24 parcels of cocaine on arrival from Brazil

NDLEA arrests ex-drug convict with 24 parcels of cocaine on arrival from Brazil

We'll reconcile Tinubu, Osinbajo, other APC aspirants after primaries - Adamu

We'll reconcile Tinubu, Osinbajo, other APC aspirants after primaries - Adamu

Buhari returns from Abu Dhabi amidst Electoral Act confusion

Buhari returns from Abu Dhabi amidst Electoral Act confusion