When oil goes negative: How did it happen, what it means for Indian economy

The price of the US’ home-produced West Texas Intermediate (WTI) crude turned negative for the first time in history. Negative price in crude oil would mean producers paying buyers to take the commodity off their hands.

Here is a look at what the reasons for this decline in prices are, and its implications for India.

Why prices dropped to a historic low?

Prices dropped in the futures trade — where a buyer seals a deal to buy crude at a stated price at a particular time. A major reason for the decline was the move by traders to offload their holdings so as to avoid having to take fresh delivery and incur storage costs, given the May futures contracts were due to expire on Tuesday.