Plunge of US crude prices into negative territory unlikely to be the new normal

THE world stood aghast on Monday night following the historic crash of US crude prices.

The spectacular fall was prompted by battered oil demand in the wake of widespread shutdowns to contain the Covid-19 outbreak and fears that US storage facilities were hitting the brim.

West Texas Intermediate (WTI)'s May futures contract plumbed to a stunning minus-US$37.63 a barrel as traders bailed on the front-month contract to roll over their long positions ahead of Tuesday's expiry. It hit an extraordinary bottom of minus-US$40.32 a barrel at one point. Amid the outbreak-led demand shock, the oil market moved into a super contango where crude prices for future delivery were markedly higher than spot.