Oil Futures Go Negative in Historic Rout

West Texas Intermediate oil futures were plunging Monday afternoon—first into the single-digits and then into the red later in the afternoon. It was the first time since they started trading in 1983 that crude futures fell below $0. The previous settlement low was $10.42, which crude hit on March 31, 1986. Oil has been tumbling for months, but fell off a cliff on Monday in part because of a technical shift . The May crude futures contract expires on Tuesday, and when futures expire their price tends to converge with the spot price of the commodity. Anyone buying the May contract on Monday is likely planning on taking physical possession of the oil. And no one right now seems to want to own a barrel of oil at any price. Physical oil being sold at pipelines is selling for less than $10 because there is so little demand. Few people are driving or flying as the world hunkers down to deal with the coronavirus. The decline reflects the logistical limits of the physical oil market—there literally isn’t anywhere to put all the stuff, and not enough producers have closed off wells. Refineries don’t want to buy crude they can’t turn profitably into gasoline, so it is being pumped into storage tanks. The problem is, those storage tanks are now starting to fill up, so no one wants any new oil...MORE