Updated Apr 20, 2020 - Energy & Environment

Oil prices plunge into negative territory in historic collapse

Ben Geman, author of Generate

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.

Go deeper

Updated 1 hour ago - Politics & Policy

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Global: Total confirmed cases as of 8:30 p.m. ET: 5,919,364— Total deaths: 364,459 — Total recoveries — 2,490,221Map.
  2. U.S.: Total confirmed cases as of 8:30 p.m. ET: 1,745,606 — Total deaths: 102,798 — Total recoveries: 406,446 — Total tested: 16,099,515Map.
  3. Public health: Hydroxychloroquine prescription fills exploded in March —How the U.S. might distribute a vaccine.
  4. 2020: North Carolina asks RNC if convention will honor Trump's wish for no masks or social distancing.
  5. Business: Fed chair Powell says coronavirus is "great increaser" of income inequality.
  6. 1 sports thing: NCAA outlines plan to get athletes back to campus.

Zuckerberg says Trump’s “shooting” tweet didn’t violate Facebook’s rules

Mark Zuckerberg at the 56th Munich Security Conference in Munich, Germany on February 15. Photo: Abdulhamid Hosbas/Anadolu Agency via Getty Images

Facebook did not remove President Trump's threat to send the National Guard to Minneapolis because the company's policy on inciting violence allows discussion on state use of force, CEO Mark Zuckerberg explained in a post on Friday.

The big picture: Zuckerberg's statement comes on the heels of leaked internal criticism from Facebook employees over how the company handled Trump's posts about the Minneapolis protests and his unsubstantiated claims on mail-in ballots — both of which Twitter has now taken action on.

Trump says he spoke with George Floyd's family

President Trump in the Rose Garden on May 29. Photo: Win McNamee/Getty Images

President Trump told reporters on Friday that he had spoken with the family of George Floyd, a black resident of Minneapolis who died after a police officer knelt on his neck on Monday.

Driving the news: Former Vice President Joe Biden said via livestream a few hours earlier that he, too, had spoken with Floyd's family. The presumptive Democratic presidential nominee implored white Americans to consider systemic injustices against African Americans more broadly, Axios' Alexi McCammond reports.