The price of West Texas Intermediate (US oil) in the global market collapsed to below zero, no thanks to the novel coronavirus (COVID-19) pandemic.

Bloomberg reports that oil traders are desperate to avoid taking delivery of physical crude.

It is the lowest oil prices have plunged since 1946. 

BBC reports that the severe drop on Monday was driven in part by a technicality of the global oil market. Oil is traded on its future price and May futures contracts are due to expire on Tuesday. Hence, traders were keen to offload holdings to avoid having to take delivery of the oil and incur storage costs.

The U.S. oil market has become oversupplied. And across the world, industrial and economic activities have ground to a halt as governments extend shutdowns in a bid to curb the spread of COVID-19.

An unprecedented supply cut deal by OPEC and allied members a week ago is proving too little too late.

“There is little to prevent the physical market from the further acute downside path over the near term,” Michael Tran, who is managing director of global energy strategy at RBC Capital Markets, tells Bloomberg.

“Refiners are rejecting barrels at a historic pace and with U.S. storage levels sprinting to the brim, market forces will inflict further pain until either we hit rock bottom, or COVID clears, whichever comes first, but it looks like the former.”

Since the start of the year, oil prices have plunged due to the coronavirus and a breakdown in the original OPEC+ agreement. 

Bloomberg also reports that buyers in Texas are offering as little as $2 a barrel for some oil streams, raising the possibility that producers may soon have to pay to have crude taken off their hands. 

Nigeria is Africa’s number one oil producer, with her budget pegged to the price of crude in the international market. 

Nigeria's oil variant, Bonny Light, which uses the Brent crude pricing benchmark, currently trades below $30/barrel.