US crude futures turn negative for first time on scant storage, weak demand
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.
The May US West Texas Intermediate (WTI) contract fell $19.06, or 104.3%, to a discount of 79c a barrel by mid-afternoon after touching an all-time low of -$1.43 a barrel. Brent was down $1.85, or 6.6%, at $26.23 a barrel.
The June WTI contract 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.
Investors bailed out of the May contract ahead of expiry later on Monday because of lack of demand for the actual oil.
When a futures contract expires, traders must decide whether to take delivery of the oil or roll their positions into another futures contract for a later month.
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