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Brent crude, the international benchmark, also slumped, but that contract was nowhere near as weak because more storage is available worldwide.<\/p>\n
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While U.S.\u00a0oil\u00a0prices are trading in negative territory for the first time ever, it is unclear whether that will trickle down to consumers, who typically see lower\u00a0oil\u00a0prices translate into cheaper gasoline at the pump.<\/p>\n
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As billions of people around the globe stay home to slow the spread of the novel coronavirus, physical demand for crude has dried up, creating a global supply glut.<\/p>\n
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Traders fled from the expiring<\/a> May U.S.\u00a0oil\u00a0futures contract in a frenzy on Monday with no place to put the crude, but the June WTI contract settled at a much higher level of $20.43 a barrel.<\/p>\n <\/p>\n \u201cNormally this would be stimulative to the economy around the world,\u201d said John Kilduff, partner at hedge fund Again Capital LLC in New York. \u201cIt normally would be good for an extra 2% on the GDP. You\u2019re not seeing the savings because no one is spending on the fuels.\u201d<\/p>\n <\/p>\n The May U.S. WTI contract fell $55.90, or 306%, to settle at a discount of $37.63 a barrel after touching an all-time low<\/a> of -$40.32 a barrel. Brent was down $2.51, or 9%, to settle at $25.57 a barrel.<\/p>\n <\/p>\n \u201cIt\u2019s like trying to explain something that is unprecedented and seemingly unreal,\u201d said Louise Dickson,\u00a0oil\u00a0markets analyst at Rystad Energy. \u201cPricey shut-ins or even bankruptcies could now be cheaper for some operators, instead of paying tens of dollars to get rid of what they produce.\u201d<\/p>\n <\/p>\n Refiners are processing much less crude than normal, so hundreds of millions of barrels have gushed into storage facilities worldwide. Traders have hired vessels just to anchor them and fill them with the excessoil. A record 160 million barrels is sitting in tankers<\/a> around the world.<\/p>\n <\/p>\n U.S. crude stockpiles at Cushing rose 9% in the week to April 17, totaling around 61 million barrels, market analysts said, citing a Monday report from Genscape.<\/p>\n <\/p>\n The spread between May and June at one point widened to $60.76, the widest in history for the two nearest monthly contracts.<\/p>\n <\/p>\n Investors bailed out of the May contract ahead of expiry later on Monday because of lack of demand for the actual\u00a0oil. When a futures contract expires, traders must decide whether to take delivery of the\u00a0oil\u00a0or roll their positions into another futures contract for a later month.<\/p>\n <\/p>\n Usually this process is relatively uncomplicated, but this time there are very few counterparties that will buy from investors and take delivery of the\u00a0oil. Storage is filling quickly at Cushing in Oklahoma, which is where the crude is delivered.<\/p>\n <\/p>\n Crude Storage at Sea Hits New Record at 160 Million Barrels \u2013 Sources<\/a><\/p>\n <\/p>\n \u201cThe storage is too full for speculators to buy this contract, and the refiners are running at low levels because we haven\u2019t lifted stay-at-home orders in most states,\u201d said Phil Flynn, an analyst at\u00a0Price\u00a0Futures Group in Chicago. \u201cThere\u2019s not a lot of hope that things are going to change in 24 hours.\u201d<\/p>\n <\/p>\n Prices have been pressured for weeks with the coronavirus outbreak hammering demand while Saudi Arabia and Russia fought a\u00a0price\u00a0war and pumped more. The two sides agreed<\/a> more than a week ago to cut supply by 9.7 million barrels per day (bpd), but that will not quickly reduce the global glut.<\/p>\n <\/p>\n