The coronavirus pandemic devastated cities around the world, causing a historic drop in oil demand.
Oil futures contracted negative for the first time on Monday, illustrating the overwhelming excess of oil that is destroying global energy.
June West Texas Futures ContractIntermediate (WTI), considered a benchmark for US oil prices, fell 20% to $ 14.1 per barrel. Brent crude, a global benchmark, fell 8.9% to $ 25.57 a barrel.
But the drop was more severe for the May contract, which made history by dropping into negative territory in the afternoon for the first time since 1983.It ended the day at minus $37.63 per barrel.
Physical oil prices were hit hard by falling demand and rising supply, despite agreed cuts between the countries of the Organization of Petroleum Exporting Countries (OPEC).
Unclaimed oil volumes grow despiteefforts of global manufacturers to limit production. Data released Friday by the Baker Hughes oilfield services company showed the largest weekly decline in oil rig activity in the US since 2015. The total number of drilling rigs reduced by one third in the last month.
Producers in some parts of the world shouldpay customers to take or store oil. And the resources for storing oil are exhausted, which may lead to a complete cessation of its production.
Analysts have expressed particular concern overover an increase in stocks in Cushing, Oklahoma, the main center of US crude oil trading. Since the beginning of March, the stock of the hub has grown by almost 50% and continues to replenish daily. However, storage facilities are limited and oil is forced to sell at dumping prices.
