The global economy has taken yet another unprecedented hit after coronavirus lockdowns around the world triggered a historic plunge in U.S. crude oil prices on April 20.
Stock markets across the world were reeling in volatility after some traders who had bought U.S. oil futures contracts were actually paying others to take the deliveries off their hands.
That left the U.S.-produced oil with a listed price of $0 for the first time in history.
The price of both Brent Crude and Russian-produced Urals oil also declined markedly after the negative oil prices seen in the United States.
Here are answers to some of the main questions caused by the historic crash of U.S. oil prices.
What is the cause of the historic fall of global oil prices?
The coronavirus pandemic has wreaked havoc on the global demand for oil, creating a supply glut and filling oil-storage facilities around the world to near capacity.
Due to the basic market forces of supply and demand, traders now have difficulty finding buyers willing to purchase futures contracts for crude oil deliveries in May or June.
That has sent the price of oil futures contracts spiraling downwards.
The benchmark price for North Sea Brent Crude on April 21 fell by nearly $12 per barrel overnight for June deliveries, selling at an 18-year low of just $17 per barrel.
That is a fall of more than 60 percent from January's peak this year.
Brent Crude is easier and cheaper to transport than its U.S. counterpart because Brent Crude is extracted directly from the North Sea.
The West Texas Intermediary (WTI) price, the U.S. benchmark for light crude, fell well into negative territory for the first time in history on April 20 -- with May futures selling as low as minus $40 per barrel.
The WTI price recovered slightly on April 21 but was negative mainly before trading at about $1 per barrel in late afternoon trading.
In a nutshell, there is an enormous global surplus in oil supplies with little demand for it, and oil companies are running out of places to store it.
Thus, some traders on April 20 essentially began paying buyers to take extra oil off their hands.
What is an oil futures contract?
An oil futures contract is a legal agreement by traders to buy or sell oil for a set price at a specified date in the future.
Those who enter a futures contract are obliged to carry out the deal at the specified price and date.
That means traders are essentially making a bet on what the price of oil will be in the future.
They hope to profit from the difference between the price specified in their futures contract and the actual price of oil on the date that the futures contract comes due.
How can the price of oil be negative?
"This has never happened before, not even close," says Tim Bray, a portfolio manager at GuideStone Capital Management in Dallas, Texas. "We've never seen a negative price on a futures contract for oil."
The WTI's negative price suggests it is traders who'd bought May oil futures who are offering to pay somebody else to deal with the oil due to be delivered next month.
But many analysts describe the negative oil price as technical, saying it is related to the way futures contracts are written.
They note that most buyers are purchasing oil for delivery in June, not May.
Energy strategist Ryan Fitzmaurice of the Dutch-based Rabobank says negative oil prices are "more technical in nature and related to the futures contract expiration."
"We could see isolated incidents where oil companies pay people to take their oil away as storage and pipeline capacity become scarce but that is unlikely on a sustained basis," Fitzmaurice says.
Why hasn’t Moscow’s deal with Saudi Arabia to cut oil production protected the Russian economy from falling oil prices?
The impact of coronavirus restrictions on global oil prices has been devastating for Russia's petrostate economy -- which depends upon revenues from oil and natural-gas exports.
The price of Russia's Urals variant of oil is determined by the global price index for Brent Crude.
Generally, Urals oil costs a few dollars less per barrel than Brent Crude.
Tumbling WTI and Brent Crude benchmarks mean dramatic declines for the price of Russian oil as well.
Meanwhile, many traders fear that an April 12 OPEC+ oil-production agreement between Russia and Saudi Arabia does not go far enough to compensate for the historic fall in global demand.
That deal calls for 23 oil-producing countries, including Russia and Saudi Arabia, to reduce their total output by 9.7 million barrels per day for May and June, cutting about 10 percent of the global supply.
What knock-on effects do falling oil prices have on Russia’s economy?
The oil markets have shown a cautious response of traders to the OPEC+ deal.
Now Russia's stock market indices and the value of the Russian ruble also are falling.
Of course, oil shares have been the biggest losers on Russia's stock market indices.
In early trading on April 21, the RTS Index lost 4.3 percent of its value while the MOEX Index was down by 1.8 percent.
On foreign-currency exchanges, Russia's ruble early on April 21 had fallen about 2 percent from its value just 24 hours earlier. It fell even further later in the day.
"Taking into account the mood in the oil market, the risks for the Russian currency temporarily point towards further weakening," Nordea analyst Grigory Zhirnov says.
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