Crude oil prices plunged below zero for the first time in history on Monday, with traders actually paying to get barrels of the stuff off their hands as the coronavirus kills demand.
The May futures contract for West Texas Intermediate crude, which is set to expire Tuesday, settled at negative $37.63 per barrel, down $55.90 or 306 percent, on Monday afternoon.
That’s an indication that traders were paying a substantial premium for the ability to slash bloated inventories amid concerns that producers are churning out more fuel than the world can store.
The below-zero contracts are deals to purchase oil due to be delivered next month, but many are concerned there won’t be anywhere to put it given that oil is still being pumped and demand has evaporated amid the pandemic.
Tanks are full at key facilities across the US, traders said, including the country’s main delivery point of Cushing, Oklahoma.
The June contract for US crude, meanwhile, held up better but was still down 11 percent at $22.26 a barrel as of 1:43 p.m. And the June futures contract for international Brent crude was recently off 8.7 percent at $25.62 a barrel.