Oil price took a negative dive yesterday, as it plunged further to below $0 a barrel for the first time as the coronavirus pandemic lingers.
MarketWatch reported that the soon-to-expire May contract for the U.S. oil benchmark finished deeply in negative territory of $-37.63 a barrel. This implied that investors will need to pay buyers to take delivery of crude oil, reflecting a growing glut of crude and a lack of storage space.
With hundreds of millions of people around the world staying at home to stop the spread of COVID-19, travel by car or plane is nearly nonexistent. Factor in a major lag in manufacturing and other economic activity that requires oil and the reasons for the dramatic crash become apparent.
While the OPEC Plus countries reached an agreement to slash production by more than 9 million barrels of oil per day, the latest crash shows it won’t be enough to overcome the surplus of oil currently out there today.
The one-day plunge is the largest on record going back to 1983, and also the lowest level for a contract on record, according to Dow Jones Market Data.