BREAKING: Oil Price Drops Below Zero in Unprecedented Crash, Many Oil Companies May Crash

By Our Reporter,

Of all the wild, unprecedented swings in financial markets since the coronavirus pandemic broke out, none has been more jaw-dropping than Monday’s collapse in a key segment of U.S. oil trading.

The Covid-19 pandemic has caused oil demand to drop so rapidly that the world is running out of room to store barrels. At the same time, Russia and Saudi Arabia flooded the world with excess supply.

That double black swan has caused oil prices to collapse to levels that make it impossible for US shale oil companies to make money. US crude for May delivery turned negative on Monday — something that has never happened since NYMEX oil futures began trading in 1983. It was easily the oil market’s worst day on record.

Many oil companies took on too much debt during the good times. Some of them won’t be able to survive this historic downturn.

The price crash is the latest indication of the depth of the crisis hitting the oil sector. Lockdowns imposed in many of the world’s major economies have sent crude demand tumbling by as much as a third, leaving the industry facing a bleakest oil macro outlook

The collapse will be a blow to US president Donald Trump, who has gone to extreme lengths to protect the US oil industry, including backing moves by OPEC and Russia to cut production.

The most stunning part of the record low in oil prices is that it comes after Russia and Saudi Arabia agreed to end their epic price war after President Donald Trump intervened. OPEC+ agreed to cut oil production by a record amount.

Trump said the OPEC+ agreement would save countless jobs and much-needed stability to the oil patch.

Yet crude has kept crashing, in part because those production cuts don’t kick in until May. And demand continues to vanish because jets, cars and factories are sidelined by the coronavirus pandemic.

The hope in the oil industry is that Monday’s negative prices are somewhat of a fluke caused by the rolling over futures contracts.