West Texas Intermediate oil prices have fallen to $0.97 per barrel, reaching a new low for the US benchmark as the market continues to crater amid the general economic collapse.
Vanishing demand due to coronavirus-related lockdowns and travel restrictions and a glut of supply have combined to heavily tank the US benchmark fuel, as prices dropped from $18.27 to below $1 on Monday – down over 90 percent from the previous day’s close.
As prices looked poised to drop still further than the record low, analysts noted it was possible for futures contracts to trade negative.
The collapse in oil markets comes amid a generalized economic downturn, with the coronavirus pandemic plunging most of the world’s economies into a downward spiral many believe will be the deepest since the Great Depression of the 1930s.
Global oil storage is currently reaching its limits, and while OPEC recently secured a 9.7 million barrel per day cut in production, the US Department of Energy is nevertheless weighing the idea of paying domestic producers to simply leave the oil in the ground so as not to further depress prices.
With May’s futures contracts set to expire on Tuesday, investors are scrambling to unload their positions, eyeing the already-glutted market and concerned about being left with a valueless commodity.
As the futures contracts hovered at record lows, oil tankers are reportedly languishing at sea, unable to find places to store their bounty onshore. Demand for the commodity has dropped an estimated 30 percent worldwide amid the coronavirus crisis.
