Why do we need to keep the terminal here negative when connected to an oscilloscope?
See the below image:



As PlasmaHH says, the (-) sides of each channel of a typical inexpensive oscilloscope are common with each other so you cannot simply connect the (-) side to the lower pin of the 1K resistor without shorting out the 1K resistor (which could destroy the diode, damage the scope or do other bad things). 

As shown the X axis shows voltage across the diode and the Y axis shows the negative of the current through the diode. By inverting the Y channel (usually there is a switch to do this) you can get your classic I-V plot, or simply flip the curve if no such switch exists.