Oil prices in the US have crashed below zero for the first time in history as demand for energy plummeted due to the coronavirus pandemic.

The historic fall was fuelled by traders not wanting to get stuck owning crude oil with nowhere to keep it.

The dramatic decline in demand due to the COVID-19 crisis means storage facilities are nearly full.

Tanks could hit their limits within three weeks, according to analysts, who said the price crash in West Texas Intermediate (WTI) crude for May delivery reflected a massive glut of oil.

The price fell as low as -$40 a barrel.


David Winans, of US Investment Grad Credit Research, said: "Today's price move feels like oil is passing a kidney stone.

"A very painful move but it can't last for long, since producers are switching off wells as we speak."

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The plunge into negative territory led to the bizarre situation where traders were being paid at least $40 to buy a barrel of oil.

Oil in the US is traded on a "future" contract and whoever owns it when it expires is obliged to take delivery of the barrel.

With the deadline for May contracts up on Tuesday, traders scrambled to offload their barrels, so they were not left to pick up oil which they do not have the ability to collect.

It meant they were willing to pay a lot of money to anyone willing to take the product off their hands.

Normally traders have no problem selling their contracts to a refinery, or other business that wants oil, before the deadline.

But international demand has dropped significantly in recent weeks, leading to the market being flooded by oil.

With many storage sites full and unable to take any more, final buyers are difficult to find.

WTI crude for May delivery was trading at just $1.5 a barrel on Tuesday morning.

That was after US President Donald Trump responded by promising to top up the nation's emergency crude oil stockpile.

The Department of Energy is leasing some of the roughly 77 million barrels of available space in the Strategic Petroleum Reserve to US oil companies to help them deal with lack of commercial storage.

The price collapse will not lead directly to significant discounts for drivers at the pumps in the UK.

That is because the price of Brent crude - the international benchmark - is still around the $25 mark.