The US oil industry is facing a doomsday scenario. The coronavirus 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.
The coronavirus 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.
cuts failed to end the panicThe 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. + agreed to cut oil production by a record amount. Trump said the + agreement would save countless jobs and much-needed stability to the oil patch. "This will save hundreds of thousands of energy jobs in the United States," Trump tweeted on April 12."I would like to thank and congratulate President Putin of Russia and King Salman of Saudi Arabia." Yet crude has kept crashing, in part because those production cuts don't kick in until May.
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