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Illustration: Aïda Amer/Axios

U.S. oil futures prices plummeted into negative territory for the first time ever in trading Monday, a stunning sign of how the glut of unwanted crude is filling up storage infrastructure as the coronavirus pandemic crushes global demand.

The state of play: May futures prices for West Texas Intermediate settled at -$37.63 on NYMEX before recovering somewhat. But prices still remain deep in negative terrain, meaning that holders of oil delivery contracts need to pay to get rid of them.

Why it matters: It's a remarkable sign of upended oil markets that are creating deep financial jeopardy for the industry.

What they're saying: "Everyone who wants oil for the month of May has already bought it. There has been very little volume today," said oil analyst Ellen Wald in an email exchange. "As a result, the price for May contracts just kept falling until it went negative."

But, but, but: The unprecedented negative pricing for May futures is also related to timing because the June contract is trading at far higher (albeit still dirt-cheap) levels in the roughly $21 range.

  • "The extreme oversupply situation now in April and expected into May is creating huge dislocations for the May 2020 WTI NYMEX contract today in low traded volumes, because the contract has its last trading day tomorrow 21 April on NYMEX," Rystad Energy analyst Bjørnar Tonhaugen said in a note as prices were collapsing Monday morning.
  • "To get a sense of what the market sees as the true value of oil, it's important to look at the June contracts, for which the trading right now is more regular," Wald wrote.

The big picture: Nonetheless, the declines show how the recent OPEC+ deal to curb supply by roughly 10 million barrels per day starting next month, which will be buffered by production declines from countries outside the group, cannot compensate for the near-term demand loss.

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