Free-Falling: U.S. Oil Drops Below $2 Per Barrel As Demand Disappears
Pump jacks draw crude oil near Long Beach, Calif., on March 9. A U.S. crude oil benchmark has hit 34-year lows.
David McNew / AFP via Getty Images
Updated at 1:44 p.m. ET
How low will oil prices go?
A key American oil benchmark, West Texas Intermediate, fell by more than 80% on Monday as global oil markets continue to grapple with a pandemic-driven collapse in demand.
At the start of 2020, a barrel of WTI cost around $60.
Shortly after 1:40 p.m. ET on Monday, a barrel was trading for less than $2 — the lowest price the WTI futures market has ever seen.
The plummeting price of WTI is driven by a trading contract deadline; oil traders have until Tuesday to sell off the current futures contract. Other types of crude, without a deadline coming up that quickly, have not dropped nearly so sharply.
But in general, crude oil prices are very low and continue to fall. Brent, an international benchmark, is in the mid-$20s and fell more than 6% on Monday.
Oil-producing countries and companies are trying to reduce their output, but they can’t keep pace with the extremely rapid drop in global demand, as the world economy hits the brakes.
That’s creating a massive oversupply of oil and raising concerns about where buyers will be able to physically store it all.
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