The global economy has been witnessing unusual fluctuations since the outbreak of COVID-19 pandemic. The collapse of the US WTI crude oil price on Monday is an example of such unpredictable move.
The widespread lockdown across the regions has led to the closure of industrial activities and restriction in travelling and transportation. These steps have caused a significant crash in the global oil demand.
Moreover, the expiration of May future contract (the future contract is a type of financial security between the buyers and sellers for buying or selling any asset on a predetermined date and predetermined price) on Tuesday also created panic among the sellers leading to a historical fall in the WTI crude oil price.
The excess supply of crude oil along with the scarcity of storage space made the oil producers/sellers pay the buyers for taking off the oil stocks from their hands.