MARY LOUISE KELLY, HOST:
Today the price of crude oil went negative, as in, oil traders and investors were paying money to unload the oil futures they had already invested in. Before you ask, yes, this is unprecedented. These, of course, are unprecedented times. NPR's Camila Domonoske has been watching the markets today. She's here with us now.
Hey there.
CAMILA DOMONOSKE, BYLINE: Hi.
KELLY: So what happened today?
DOMONOSKE: So West Texas Intermediate crude - that's the benchmark that's used in the United States to price oil - and it went bonkers today.
KELLY: Clearly.
DOMONOSKE: I woke up this morning, and it was under $12. And that felt newsworthy. It was the lowest in decades, right? So I'm like, oh, here's the news. From there, the price kept going down. You hit single digits, the lowest price ever in the history of this particular crude oil. It kept going down - $1 a barrel, zero dollars a barrel. And then it kept going down to negative $37. And when I say this has never happened before, literally, the exchange where this trading happens had to change its system to allow for negative numbers.
KELLY: So my...
DOMONOSKE: It was wild.
KELLY: Yeah, totally wild. And my follow-up question is, what is going on? That's the what happened. Now let's get to the why. Is this all about demand - the fact that we're all staying home, nobody's out driving and buying gas?
DOMONOSKE: Yeah. So that's part of it. This is - why this happened is a complicated question. Definitely part of it is that the pandemic has caused nobody to drive. People aren't flying as much as they would. Demand for oil has just gone off a cliff. So that's pushed crude prices down. That's true for all kinds of crude all around the world. So you're looking at $20 for crude instead of $60 for crude. That's low prices.
Prices going negative for West Texas - there's something else going on here. And part of it is that there was this deadline. So I have to get a little bit into how oil futures work. But you're paying now to get oil delivered later, right? So right now, maybe you would pay to get oil in May.
KELLY: OK.
DOMONOSKE: And normally, that's valuable 'cause, you know, people are going to want oil in May, right? So that's something that's worth something. But right now, because of the pandemic, because there's so much production in demand because people haven't been able to reduce production enough to keep pace with that drop, there's just too much oil in the world. So suddenly, having oil for arrival in May means you have to find somewhere to store that oil. So instead of being something that's valuable that someone will pay money to you in exchange for, you have to pay someone in order to take that off of your hands.
So this deadline is coming up tomorrow where anybody who was holding an oil future as an investment has to find a buyer for it by tomorrow or else they're going to get this shipment of oil. So if you're an investor who was planning to make money off of this, suddenly you're not going to make money off of it. You also don't want to get stuck with oil that you can't store. So you had to find a buyer, and they were having to offer money to get people to commit to take this oil.
KELLY: And just really quickly, Camila, can oil prices stay negative?
DOMONOSKE: We're expecting the oil prices will go back up once this deadline has passed and we're returning to more normal times, but they'll still be low.
KELLY: All right. NPR's Camila Domonoske on a stunning day for oil prices.
Thank you, Camila.
DOMONOSKE: Yeah. Thank you. Transcript provided by NPR, Copyright NPR.
