Oil prices plunged to their lowest level since at least the 1980s on Monday when the cost for a barrel of crude dropped below $1, demand for energy collapsed in the U.S and most heavy users of oil globally and traders don’t want to get stuck owning crude with nowhere to store it.
Stocks were also slipping on Wall Street in afternoon trading, with the S&P 500 down 0.9%, but the market’s most dramatic action was by far in oil, where benchmark U.S. crude for May delivery plummeted to negative $3.70 per barrel, as of 2:15 pm. Eastern time.
Much of the drop into negative territory was chalked up to technical reasons — the May delivery contract is close to expiring so it was seeing less trading volume, which can exacerbate swings. But prices for deliveries even further into the future, which were seeing larger trading volumes, also plunged. Demand for oil has collapsed so much due to the coronavirus pandemic that facilities for storing crude are nearly full.
The coronavirus pandemic has kept most of the world at home and not using fuel to commute or travel, which has led to a devastating decline in demand. The price of oil has crashed at a rapid rate since it began the year in the $60 range, representing a drop of more than 90% in just three months. The price of oil had been hovering around $20 a barrel recently.