Oil price goes negative as demand collapses; stocks dip

NEW YORK (AP) — Oil futures plunged below zero for the first time on Monday as demand for energy collapses amid the coronavirus pandemic and traders sought to avoid owning crude with nowhere to store it.

Stocks were also slipping on Wall Street in afternoon trading, with the S&P 500 down 1.2%, but the market’s most dramatic action by far was in oil, where benchmark U.S. crude for May delivery plummeted to negative $35.20, as of 2:30 pm. Eastern time. It was nearly $60 at the start of the year, before business-shutdown orders swept the world and idled factories, offices and automobiles.

Much of the drop was chalked up to technical reasons — the May delivery contract is close to expiring so its trading volume was light, which can exacerbate swings. But prices for deliveries even further into the future, which were seeing larger trading volumes, also plunged. Demand for oil has collapsed so much that facilities for storing crude are nearly full.

Tanks could hit their limits within three weeks, according to Chris Midgley, head of analytics at S&P Global Platts. And traders are willing to pay someone else to take that oil for delivery in May and shift the burden of figuring out where to keep it.

Benchmark U.S. crude oil for June delivery, which shows a more ”normal” price, fell 16.5% to $20.90 per barrel. Big oil producers have announced cutbacks in production in hopes of better balancing supplies with demand, but many analysts say it’s not enough……..

Brent crude, the international standard, was down $2.46 to $25.62 per barrel. .