Oil price falls below $5 amid epic supply glut

The US benchmark crude oil price sank to its lowest level ever on Monday, falling below $5 a barrel amid an epic supply glut and the coronavirus pandemic’s hit to demand.

After twice beating the record low, dropping to $4.04, West Texas Intermediate (WTI) for May delivery had recovered slightly at about 1720 GMT, and was trading at $5.18 a barrel in New York.

The plunge defied a deal reached last week by OPEC and independent producers to slash output by nearly 10 million barrels per day starting May to boost prices. It also showed the enduring power of the pandemic, which has forced people to stay indoors to stop the spread of COVID-19, bringing much of the global economy to a halt.

A price war between Saudi Arabia and Russia had accelerated the slide prior to the production deal, hurting US shale producers. And storage capacity is becoming scarce in the United States, with the main WTI facilities in Cushing, Oklahoma filling up.

Wall Street was trading lower amid the turmoil on oil markets, with the Dow down 1.3 percent to 23,930.97.

The broad-based S&P 500 lost 0.8 percent to 2,851.58, while the tech-rich Nasdaq dipped 0.1 percent to 8,641.94.

Oil company shares were predictably battered in the downturn, with Chevron down 1.8 percent and ExxonMobil losing 3.2 percent.