US crude oil futures turned negative on Monday for the first time in history as storage space was filling up, discouraging buyers as weak economic data from Germany and Japan cast doubt on when fuel consumption will recover.
Physical demand for crude has dried up, creating a global supply glut as billions of people stay home to slow the spread of the novel coronavirus.
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 US crude for May delivery plummeted to negative $3.70 per barrel, as of 2:15 pm. Eastern time.
Benchmark US crude oil for June delivery, which shows a more ”normal” price, fell 14.8% to $21.32 per barrel, as factories and automobiles around the world remain idled.
Big oil producers have announced cutbacks in production in hopes of better balancing supplies with demand.
“Basically, bears are out for blood,” analyst Naeem Aslam of Avatrade said in a report. “The steep fall in the price is because of the lack of sufficient demand and lack of storage place given the fact that the production cut has failed to address the supply glut.”
Halliburton swung between gains and sharp losses, even though it reported stronger results for the first three months of 2020 than analysts expected.
The oilfield engineering company said that the pandemic has created so much turmoil in the industry that it “cannot reasonably estimate” how long the hit will last. It expects a further decline in revenue and profitability for the rest of 2020, particularly in North America.
