NEW YORK: Oil prices ended trading in negative for the first time in New York on Monday, as a supply deficit forced traders to pay for others to take the product.

With insufficient space to store crude, the US benchmark West Texas Intermediate ended trading for May delivery at $37.63 a barrel ahead of Tuesday’s closing for future contracts — when traders who buy and sell the product for profit would have had to take physical possession of it.

“It’s a contract for something that nobody wants to buy,” said Matt Smith of ClipperData.

The unprecedented collapse in prices is a result of the coronavirus pandemic, which has ravaged the global economy by forcing billions of people to stay home to prevent its spread, and a continuing price war between Saudi Arabia and Russia’s top producers.

The price war led to an over-supply that pushed down crude to the detriment of US shale producers.

A deal agreed last week between OPEC and its peers would have reduced production from May onwards by around 10 million barrels a day, but this is obviously not enough.

“There is no demand for gasoline and diesel fuel,” said John Kilduff of Again Capital. “The demand has just plummeted.”

Smith noted, however, that the negative prices of Monday were a reaction to the storage shortage ahead of Tuesday’s deadline, and once that passes, they should be turning positive again.

“In two days, it will be gone,” he said.