U.S. crude futures plunge to lowest on record on scant storage, weak demand

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NEW YORK (Reuters) – Oil prices tumbled on Monday, with the U.S. crude futures contract plunging more than 50% to the lowest price on record, as investors worried about lack of storage and German and Japanese data indicated a bleak global economy.

Brent LCOc1 was down $1.50, or 5.3%, to $26.58 a barrel by 12:16 p.m. EDT (1616 GMT), while the front-month May WTI contract CLc1 fell $9.43, or 51.6%, to $8.84 a barrel.

Prices have been pressured for weeks with the coronavirus outbreak hammering demand even as Saudi Arabia and Russia failed to reach an agreement to cut supply. The two sides, with U.S. urging, agreed more than a week ago to cut supply by 9.7 million bpd, but that will not quickly reduce the global glut.

Brent oil prices have collapsed around 60% since the start of the year, while U.S. crude futures have fallen around 85%, to levels well below break-even costs necessary for many shale drillers. This has led to drilling halts and drastic spending cuts.

U.S. crude futures hit a low of $8.75 a barrel, the lowest on record. Analysts said the sell-off was exacerbated by the contract’s imminent expiry.

The spread between the front-month contract and the second month was around $14, the widest in history, as the June contract CLc2, which is more actively traded, fell $2.27, or 9.1%, to $22.76 a barrel.

Reporting by Stephanie Kelly in New York; additional reporting by Bozorgmehr Sharafedin in London, Florence Tan in Singapore and David Gaffen in New York; Editing by Barbara Lewis, David Goodman, Alexander Smith and David Gregorio

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