Oil has traded at negative prices for the first time in United States’ history, with demand for energy collapsing amid the coronavirus pandemic.
The benchmark price for US crude plummeted to negative $US35.20 ($55.50) a barrel as traders sought to avoid owning crude with nowhere to store it.
It was nearly $US60 ($94.60) at the start of the year, before business-shutdown orders swept the world and stopped the operation of factories, offices and cars.
Demand for oil has collapsed so much that facilities for storing crude are nearly full.
“It’s a historic day,” Bob Yawger, director of futures at Mizuho Securities said.
“What it means is there’s no available storage anymore so the price of the commodity is effectively worthless.
There’s no place to put it, so you’ve got to flush it basically.”
“They don’t want it. So when it’s minus a dollar, they’ll pay you a dollar to get it out of there.”
Big oil producers have announced cutbacks in production in the hope of better balancing supply with demand, but many analysts say that is not enough.
Traders are willing to pay someone else to take that oil for delivery in May and shift the burden of figuring out where to keep it.
“Basically, bears are out for blood,” analyst Naeem Aslam said in a report.
“The steep fall in the price is because of the lack of sufficient demand and lack of storage place given the fact that the production cut has failed to address the supply glut.”
Brent crude, the international standard, has meanwhile fallen to $US25.62 ($40.39) per barrel.