US oil prices on Monday hit a record low of below $2 a barrel, as the demands collapsed due to the coronavirus pandemic.

The US marker West Texas Intermediate (WTI) lost 89.87%, sinking to US $1.85 a barrel, on May contract, the lowest level since the launch of contract in 1983. It is still fluctuating and trading just above $2/barrel at 1:45 pm EDT.

The crash in oil prices came on warnings that crude oil storage could fill up within weeks as demands are hit due to lockdown across the world over coronavirus pandemic.

According to AFP, the steep decline was driven by investors closing out their positions ahead of the May contract expiry on Tuesday. Those holding the contracts will have to take physical delivery of the contracts even as they face storage issue.

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WTI for June delivery was also down 10% at US $22.62. The European benchmark contract - London Brent North Sea oil - for June delivery was down 6.3% at US $26.30 per barrel.

Brent crude, the international market, dropped 6.16% to $26.35.

"The sell-off in near month contract is large because of position squaring ahead of expiry. There are huge stocks in US storage and this has pressurized near-month prices,” Ravindra Rao, VP- Head of Commodity Research at Kotak Securities, said in his comment on falling oil prices.

The storage facilities across the world are exhausted as stockpiles continue to build because of the crash in consumption caused by the coronavirus outbreak.

With the number of COVID-19 cases worldwide crossing 2.4 million and over 167,000 deaths, close to half the world's population is staying home including in India where 1.3 billion people are under strict nationwide lockdown. This has hit the oil demand hard and refineries are not processing crude fast enough to clear the storage.

Reports said that WTI's main US storage facilities in Cushing, Oklahoma, were filling up.