How can oil prices plunge below zero?

US oil prices plummeted below zero at the close of market Monday, a historic first for the commodity.

As dwindling demand caused by COVID-19 shutdowns pushed storage facilities to their brink, the price per a barrel dropped to negative $37.63 for May’s future contracts.

“That is, producers have to pay $30 per barrel of oil to get someone to take it off their hands,” says Daniel Scheitrum, an assistant professor in the University of Arizona’s agricultural and resource economics department. “This time last year, the price was positive $65 per barrel.”

Here, Scheitrum, whose research focuses on the economic, trade, and financial impacts of agricultural and energy policy, breaks down the situation with oil prices and explains what this might mean for American consumers and oil producers:

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