Oil prices fell to zero today. And kept on going. May WTIC futures traded below $-36 a barrel. No, that’s not a typo. Traders are literally paying to have oil taken off their hands. Here, you can have a barrel of oil and we’ll throw in $36 for your trouble.
The glut of oil has reached the point where there is just not enough storage for it all. It’s expensive for producers to shut down wells and then restart them, so they’ve continued to produce while consumption has collapsed. Buyers are essentially being paid for storage as the cost exceeds the market value of the commodity itself. May futures expire tomorrow, meaning those long the contract would be obliged to take delivery. June futures are under pressure as well, but held above $20 today. This is a first for WTIC, however; it has never before traded below zero.
What next? Negative rent?