April 20 (UPI) — The three major U.S. stock indexes dropped on Monday after U.S. oil prices fell into negative territory.
The Dow Jones Industrial Average closed down 592.05 points, or 2.44 percent, while the S&P 500 dropped 1.79 percent and the Nasdaq Composite fell 1.03 percent.
The U.S. market decline came after West Texas Intermediate crude prices plummetted 275.15 percent to negative $32 per barrel. Brent crude also fell 6.55 percent to $26.24 per barrel.
The June contract for WTI futures also fell 18 percent to $20.43 per barrel.
Oil prices continue to struggle despite OPEC and Russia agreeing to a deal this month to cut production by 10 million barrels per day for two months, starting in May. The move was made to prevent an oversupply of oil on world markets.
Investors were also concerned that companies will not have the space to store the excess oil as they await a rally in crude prices in the future.
“The curves are saying we have a big problem with the storage of oil right now,” Bjarne Scheildrop, chief commodities analyst at SEB told CNBC.
Scheildrop added that the storage issue should “vanish rapidly” as oil demand is expected to rebound while inventories draw down.
The dramatic decrease in demand due to the coronavirus crisis is also depressing oil prices.
Energy, real estate and utilities each fell more than 3 percent to lead the S&P 500’s decline, while Chevron and Exxon Mobil each dropped more than 4 percent as oil prices plunged.
Monday’s decline followed two weeks of positive gains amid optimism that businesses and other facilities would reopen following orders to remain at home to prevent the spread of the COVID-19 outbreak.
