The oil market has turned upside down this week--and there's no reason to think the dynamic that sent it spiraling will change in the near future. https://www.barrons.com/articles/oil-prices-wti-negative-positive-zero-coronavirus-glut-51587486514

The trouble appeared in oil futures, an investment tied to the delivery of a real-world commodity. While the majority of oil-futures trading is people betting on the direction of the price, there's a small portion of people who intend to actually take possession of the oil.

The May oil contract for West Texas Intermediate crude oil fell into negative territory on Monday—meaning traders were willing to pay buyers tens of thousands of dollars per contract to take the oil off their hands.

That drop was "completely game-changing,” said Dave Ernsberger, global head of pricing and market insight at S&P Global Platts, in an interview with Barron’s. “Going into the expiry yesterday no one thought prices could go negative, let alone minus $30.”

The reason oil went negative? No one wants to buy it. Americans are staying at home to stop the spread of the coronavirus. Refiners don’t want to buy oil that they can’t profitably turn into gasoline. Storage tanks have been filling up with oil that is going unused.

In fact, storage has gotten more and more scarce—a problem for traders who own oil futures. They're expected to take physical delivery of 1,000 barrels of oil per contract at the end of the day Tuesday.

Oil returned to positive territory Tuesday, but the dive is not just a one-day phenomenon. Ernsberger expects a similar dynamic as the June contract gets closer to expiration. “The same thing is going to happen in other markets for the next eight weeks for sure,” he said.

In the short term, this will cause upheaval for oil companies as production halts. Oil has to go somewhere, or it has to stay in the ground—and U.S. producers are the most likely candidates to stop production.

“This is a problem that’s going to re-emerge month after month until one of two things happen,” said CFRA analyst Stewart Glickman. “Demand picks up because economies come off the mat, or producers start shutting off their wells."

President Donald Trump said Tuesday morning that he directed the energy and Treasury secretaries to create a bailout plan for U.S. oil and gas industries, while Saudi Arabia said it was ready to work with other producers to stabilize the oil market.