US oil prices have plunged into negative territory as demand dries up for the first time in history as a result of a lack of demand due to Covid-19 global shutdowns. The price of a barrel plummeted to minus $37.63, compared to $60 dollars at the beginning of the year. Crude oil has never fallen by more than 100 per cent before, according to experts.
Some oil firms are now resorting to renting tankers to store surplus supply, which has forced the price of US oil into negative territory. However, storage capacity is also predicted to run out in May. This has led to oil producers now paying buyers to take the commodity off their hands to avoid finding extra storage capacity, driving prices down even further.
The oil industry has been struggling with declining demand due to global shutdowns, as well as a price war between Saudi Arabia and Russia, which only inundated the market with low-cost oil. The issue was resolved earlier this month as Opec members and its allies, including Saudi Arabia and Russia, finally agreed on a deal to cut global supply of oil by 10 per cent and end the price war. However, many experts believe the cuts have not been enough to make a difference, as prices have continued to plummet.