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Oil futures contract expiring Tuesday turned negative as demand for oil collapses

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FILE – In this Wednesday, April 8, 2020, file photo, the sun sets behind an idle pump jack near Karnes City, Texas. Demand for oil continues to fall due to the new coronavirus outbreak. As demand for fuel plummeted worldwide and the oil industry faced a devastating drop in oil prices, the U.S. took the rare move of stepping into negotiations involving the member countries of OPEC and non-members such as Russia and Mexico. (AP Photo/Eric Gay, File)

U.S. crude prices dropped more than 100 percent and turned negative for the first time in history on Monday due to the coronavirus pandemic.

The price of the nearest oil futures contract, which expires Tuesday, was the hardest hit, detaching from later month futures contracts with a drop of more than 100 percent. West Texas Intermediate crude for May delivery tanked more than 120 percent to turn negative for the first time in history, trading at -$37.63 per barrel, according to CNBC.

Meanwhile, international benchmark Brent crude, which has already rolled to the June contract, traded 8.9 percent lower at $25.58 per barrel. The June WTI contract, which expires on May 19, fell about 18 percent to trade at $20.43 per barrel. The July contract was roughly 11 percent lower at $26.18 per barrel.

The front part of the oil futures ‘curve,’ which is the May contract that expires on Tuesday, was hit the hardest since it applies to fuel that’s set to be delivered while most of the country remains on lockdown thanks to the coronavirus. 

The only buyers of oil futures for that contract are entities that want to physically take the delivery like a refinery or an airline. But storage tanks are filled so they don’t need it.

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