Oil prices plunged below $3 a barrel on Monday, hitting a record low as the coronavirus pandemic continues to slash demand globally and cause storage issues.
The U.S. marker, West Texas Intermediate crude dropped 83 percent to $2.96 per barrel, spurred by traders abandoning the May contract that expires on Tuesday. The price is the lowest since crude futures began trading in 1983 and is seconded by a drop to $10.20 in March, 1986.
The international marker, Brent crude, which includes June delivery, meanwhile sank 6.2 percent to $26.35 per barrel as global demand collapses by about one-third. WTI contracts for June and July dropped less steeply than the May contract.
The drop comes on the heels of oil’s tumble to an 18-year low last week despite a deal reached by Saudi Arabia and Russia earlier this month to curb production after urging from President Trump. The agreement stipulated that 23 countries will cut a total of 9.7 million barrels a day from global markets. The oil crisis began early last month when a breakdown in negotiations with OPEC led Saudi Arabia to slash its crude export prices, causing global markets to plunge even further amid the coronavirus disruption.
Since the beginning of the year, oil prices have dropped by more than 90 percent due to the coronavirus outbreak as well as snags in OPEC negotiations. Traders have struggled with long term storage issues in the face of lower demand, which has caused prices to drop off steeply.
Demand for crude in the U.S. and around the globe has continued to decline as many countries remain on lockdown in an effort to stem the spread of the coronavirus, which has infected 2.3 million people globally as of Monday afternoon and killed nearly 161,000. Governors across the U.S. have issued stay at home orders, requiring residents to remain in their homes except for necessary activities such as buying groceries, medical care, or essential work.