US crude oil futures turned negative for the first time in history today as storage space filled up and demand fell to coronavirus lockdowns across the world.
The May US WTI contract CLc1 fell $19.06, or 104.3 per cent, to a discount of 79 cents a barrel, after touching an all-time low of minus $1.43 a barrel.
Meanwhile, Brent LCOc1 was down $1.85, or 6.6 per cent, at $26.23 a barrel.
The June WTI contract CLc2 is trading more actively at a much higher level of $21.6 a barrel. The spread between May and June was more than $23, the widest in history for the two nearest monthly contracts, Reuters reported.
The oil market has come under mounting pressure during the coronavirus pandemic as demand slumps due to lockdown measures.
US storage facilities have also started to struggle with the surplus suppliers, weakening prices further.
Earlier this month, Opec agreed to slash global oil output by approximately 10 per cent, a deal that represented the largest cut in oil production ever.
However, both analysts and investors have expressed concerns over whether the cuts go far enough to offset the sharp fall in demand amid a coronavirus-induced recession.
Oil and Gas UK chief executive Deirdre Michie said: “While we have anticipated continued pressures on oil markets, there’s no getting away from the fact that this situation is a body blow for an industry already creaking under the strains of the impact of COVID-19 and sustained low commodity prices.
“The dynamics of this US market are different from those directly driving UK produced Brent, but we will not escape the impact.
“Ours is not just a trading market; every penny lost spells more uncertainty over jobs, our contribution to public services and to the just transition we all want to see. OGUK will be pressing the case for a COVID-19 resilience package to governments in the coming days which will focus on protecting the supply chain, jobs and our ability to continue to reposition ourselves for the future.”