Reuters

Oil prices plunged to a record low and into negative territory on Monday as uncertainty mounted about storage for excess supply.

WTI crude oil futures expiring in May plunged 321%, to -$40.32 a barrel, while Brent crude slid 9.5%, to $25.41 at intrasession lows.

The coronavirus pandemic has torpedoed demand for the commodity, with fuel use in cars and planes slumping.

The commodity has fallen over the past week even after OPEC and its allies agreed to a historic production cut intended to backstop prices.

The WTI market has entered contango, meaning spot prices are lower than prices for future delivery of crude oil — a highly unusual occurrence.

Follow the price of oil live with Markets Insider.

Oil plunged into negative territory for the first time on record on Monday. The commodity's latest round of sharp selling came as uncertainty mounted about storage for excess oil. Demand for crude has plummeted since the coronavirus outbreak froze activity worldwide.

The price of West Texas Intermediate crude oil futures expiring in May plunged 321%, to -$40.32 a barrel, the lowest level ever recorded. Brent crude losses were muted by comparison, with the commodity sliding 9.5%, to $25.41 a barrel at intrasession lows.

The price of oil has continued to slide even after OPEC and its allies agreed to the biggest-ever production cut — one intended to backstop prices. Investors remain unconvinced that the cuts can offset cratering demand for the commodity as the novel coronavirus pandemic keeps society from operating normally.

Read more: The price of US crude oil just went negative for the first time ever. Here's what that really means, and why you can't fill up your car for free.

WTI crude for May delivery has traded at large discounts to longer-dated contracts. That dynamic is playing out amid worry that a key storage hub in Cushing, Oklahoma, is nearing capacity, according to Bloomberg.

"Basically, bears are out for blood," said Naeem Aslam, the chief market analyst at AvaTrade. "The steep fall in the price is because of the lack of sufficient demand and lack of storage place given the fact that the production cut has failed to address the supply glut."

He added: "The bottom line is that there is no doubt that oil prices are way oversold at the current level, but given the circumstances, it is likely that the price may continue to fall further because the rig count hasn't touched its bottom yet."

Read more: Why the price of oil is continuing to free-fall after a historic supply cut — and when experts think it may finally reach rock bottom

Oil prices and rig counts are strongly correlated. Higher oil prices make production more profitable, encouraging more producers to operate.

The closely watched Baker Hughes oil-rig report showed that as of Friday, oil-rig counts in the US were 544, down roughly 35% from the same time in March.

Oil is now in contango

The movements prompted WTI oil prices to enter contango, meaning oil contracts for future delivery are more expensive than spot prices.

"The contango on WTI from now spot to the June contract can be described as a mega-contango," said Jeffrey Halley, a senior market analyst for Asia-Pacific at Oanda. "As of Friday, spot was $18 a barrel with the June contracts around $25 a barrel."

Halley added that "the extreme contango tells us nobody in America wants the oil in the short-term."

Monday's price action pushed the commodity further into contango.

"For an investor who holds a long term perspective, a time frame of 12 months to 24 months, the current plunge in oil price represents an opportunity," Aslam said.

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Andy Kiersz / Business Insider

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