Stocks sank Monday morning as oil prices plunged to the lowest level in nearly two decades, reflecting doubts over how soon the global economy can recover from the coronavirus pandemic.
The Dow Jones Industrial Average has dropped more than 270 points, falling 1.1 percent after the price for a barrel of West Texas Intermediate Crude delivered in May fell below $1 shortly after 2 p.m. The Nasdaq broke even after falling 1 percent while the S&P 500 index had fallen nearly 0.7 percent.
The price of oil has plunged through record lows throughout the coronavirus pandemic amid a steep decline in demand for fuel. The widespread adoption of social distancing practices across the world has drastically reduced travel for business and leisure, creating a massive surplus of unneeded oil and fuel.
Oil prices sank deeper over the weekend amid mounting concerns over the ability of refineries and other petroleum industry firms to store the vast quantities of excess oil piling up throughout the pandemic.
The Department of Energy is preparing to rent 23 million barrels of space within the Strategic Petroleum Reserve to oil companies in exchange for the oil they would store with the federal government.
The Trump administration has also floated the idea of paying oil companies to leave oil wells untapped, a way to reduce U.S. production in line with a deal struck with other petroleum exporting countries.
Plunging oil prices were once a boon for Americans employed outside of the industry, easing financing the pressure household budgets. But the steady coronavirus-driven nosedive poses yet another economic challenge to the country after U.S.’s recent emergence as a net exporter of oil.
Roughly 22 million Americans have applied for unemployment benefits as businesses across the country are forced to shutter and layoff workers to slow the spread of the pandemic. While President Trump has voiced optimism in a swift rebound to the strong pre-pandemic economy, a massive shortfall in testing capacity means the recovery will likely be long and grueling.
Updated 2:08 p.m.