US oil prices plunge below zero for first time in history due to coronavirus COVID-19 crisis

In a first, United States oil prices plummeted to negative on Monday (April 20) as the demand for energy plunged sharply due to the coronavirus COVID-19 pandemic. According to The New York Times, the fuel storage tanks in the United States were near capacity making it tough for the companies to hold all the unused crude.

As a result of the unprecedented crash in oil prices, US stocks also plunged 592 points. The fall of May benchmark into negative territory means that oil producers are willing to pay buyers to take the commodity off their hands. The massive fall in demand for oil has forced the oil firms to rent tankers to store the surplus supply and this is the main reason why the price of US oil into negative territory. The price of a barrel of West Texas Intermediate (WTI), the benchmark for US oil, fell to minus $37.63 a barrel on Monday. Brent crude, the global benchmark for oil, is trading around USD 26 a barrel, having gone down by as much as 70 per cent since the start of January.

Demand for oil has plummeted to negative for first time in history as billions of the people across the world are remaining indoors due to lockdowns in different countries in order to curb the spread of the coronavirus.

On April 12, Saudi Arabia and Russia had reached an agreement to slash output by 9.7 million barrels a day. The agreement means that that the oil output will decrease by around 10 percent from May 1. Notably, the global demand for crude has come down by around 20 percent since the outbreak of coronavirus.

As part of the deal Aramco - Saudi's biggest oil producer - has agreed to cut output by 23 percent and it is expected that the company could for more reductions in the future.

Meanwhile, US President Donald Trump on Monday said that Washington will look into halting oil imports from Saudi Arabi and added that he is planning to add as much as 75 million barrels of oil to the strategic petroleum reserve of the US.