The oil price crashed into negative territory for the first time ever last night following a collapse in demand during the pandemic.
In an unprecedented move on global markets, the crude benchmark in the US fell below $0 a barrel, meaning producers were paying buyers to take it off their hands.
The dramatic slump in prices comes as demand evaporates during the Covid-19 outbreak, leaving the world awash with oil and not enough capacity to store it.
In an unprecedented move on global markets, the crude benchmark in the US fell below $0 a barrel, meaning that producers were paying buyers to take it off their hands
Lockdowns in countries across the world have shut factories, grounded aircraft and taken many cars and other vehicles off the roads.
With the industry in crisis, oil producers in parts of the world are now paying buyers to take oil off their hands rather than shutting down their fields altogether.
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Neil Wilson at Markets.com said: ‘I never thought I would see the day when oil would be this low.’
Brent crude – the key benchmark in London – fared better with prices down around 10 per cent at close to $25 a barrel. Brent was trading at almost $70 a barrel early this year.
The Opec nations has agreed to cut production in an attempt to prop up prices, but the reductions have yet to come in meaning supply continues to outstrip demand and leave the world short of storage.
The storage problem is especially fraught in the US, where the main facility is almost full and the landlocked nature of its booming shale industry means it is hard to get it to the coast to send it overseas.
The current market price of US oil is connected to the contract for May, which expires today.
At one point last night, the price of so-called West Texas Intermediate crude for May delivery hit minus $40.32 per barrel on the New York Mercantile Exchange.
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