Oil's chaotic collapse deepened, and stocks around the world dropped on Tuesday as markets remain upside down amid the economic carnage caused by the coronavirus pandemic.
A day after oil futures plunged below zero for the first time, traders in one corner of the U.S. crude market were still close to paying others to take it off their hands. That's a market quirk created by a glut of oil, which has traders running out of places to store it in the near term.
Prices are still above zero for oil elsewhere in the world and for deliveries further into the future. But they slid sharply Tuesday on the same ultimate concern: A global economy incapacitated by the virus outbreak doesn't need to burn as much fuel. Airplanes are parked, cars are garaged and factories are idled with millions of workers losing their jobs every week.
The crumbling oil market dragged on stocks, and energy producers around the world sank sharply from Exxon Mobil in Texas to Total in France. The S&P 500 was down nearly 1.5% after the first half hour of trading, following larger losses across Europe and Asia.
Treasury prices rose, sending yields lower, in another sign of the worry washing over markets.
Even with all the chaos in the oil markets, some signs of economic activity on the horizon were poking through elsewhere.
The Senate's Democratic leader said negotiators reached agreement on a nearly $500 billion proposal to provide more loans and aid to small businesses and hospitals. Georgia's governor, meanwhile, announced plans late Monday to allow gyms, hair salons and other businesses to reopen as early as Friday.
Rising optimism among some investors that infections may be leveling off in some areas and that parts of the economy could reopen have helped stocks rally recently, with the S&P 500 up more than 20% since hitting a low in late March.
The rally got its start after the Federal Reserve and Congress promised massive amounts of aid for the economy.
But the data coming in on the economy in the here and now continues to be dismal. A report Tuesday showed that sales of previously occuppied homes in the United States fell even more than economists expected last month. But the economic pain is most clear in the oil market.
A barrel of U.S. oil to be delivered in May costs about the same as a bottle of water: $1.25. It was at negative $1.48 just a few minutes before stocks began trading in New York and had settled at negative $37.63 on Monday.
Because of the collapse in demand, storage tanks for oil are close to the brim at a key energy hub in Oklahoma. That has traders willing to pay others to take delivery of that oil in May, so long as they also take the burden of figuring out where to put it.
Prices are higher for oil to be delivered later in the summer, when demand could conceivably be stronger as lockdowns lift. But even there, optimism is flagging.
A barrel of U.S. oil for delivery in June dropped $4.86, or 23.8%, to $15.56. Brent crude, the international oil standard, fell nearly 22% to $20.02 per barrel.
We could merely be in the eye of the hurricane as the epicenters of its rage remain centered around demand devastation and crude oil oversupply, Stephen Innes of AxiCorp. said in a commentary.
At a minimum, oil prices will be the last asset class to recover from lockdown and only when travel restrictions are lifted, he said.
The Dow Jones Industrial Average was down 368 points, or 1.6%, at 23,282, and the Nasdaq was down 1.5%.
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