Oil Prices Drop into Negative Territory for First Time in Recorded History, June Futures Back Above $20

WASHINGTON, D.C. — Global declines in demand brought on by the COVID-19 outbreak caused prices for U.S. crude oil to fall into negative territory on Monday for the first time since the commodity’s futures contracts began trading in 1983. The descent into negative prices essentially means that suppliers must pay to have product purchased from them. Despite recent agreements by major oil-producing nations to undertake supply cuts, evaporated demand for travel and transportation services has contributed to a supply glut that has producers scrambling to store excess inventory. The price decline came to a head on Monday as the May contract for oil futures approached its expiration date, prompting a major selloff that sent prices for West Texas Intermediate (WTI) downward by more than 100 percent to negative $37.63 per barrel. However, the June futures contract for WTI, which is considered the benchmark product by which American oil markets are measured, is currently trading above $20 per barrel, reflecting a stronger outlook for that month in terms of demand. Texas has been producing record amounts of oil in recent years, even as prices hovered between $40 and $70 per barrel in the years following the slump that began in late 2014, helping the United States become a leading supplier in the process. According to the U.S. Energy Information Administration, Texas produces 41 percent of the nation’s crude, far more than the next-biggest producers in North Dakota (11 percent) and New Mexico (8 percent).