Too Much Oil: How a Barrel Came to Be Worth Less Than Nothing
One oil price went negative on Monday, signaling that there is no place to store all the crude the world is producing but not using.
Something bizarre happened in the oil markets on Monday: Prices fell so much that some traders paid buyers to take oil off their hands.
The price of the main U.S. oil benchmark fell more than $50 a barrel to end the day about $30 below zero, the first time oil prices have ever turned negative. Such an eye-popping slide is the result of a quirk in the oil market, but it underscores the industry’s disarray as the coronavirus pandemic decimates the world economy.
Demand for oil is collapsing, and despite a deal by Saudi Arabia, Russia and other nations to cut production, the world is running out of places to put all the oil the industry keeps pumping out — about 100 million barrels a day. At the start of the year, oil sold for over $60 a barrel but by Friday it hit about $20.