The low demand for crude and lack of more storage capacity has crashed the oil industry to levels not seen in a long time. West Texas Intermediate has dropped to the $1 range as the oil market has been highly affected by the lockdown due to the coronavirus.
Oil storage capacities are filled to the brim and are at the risk of overflowing, meaning some oil producers in the US and Canada could soon pay buyers to take the oil off their hands.
An analysis by Vandana Hari, a specialist in oil market exploration, stated that until the lockdown in the US is dealt with, the price of oil will go down or remain around the current levels.
The collapse of oil prices is sending shockwaves to the entire oil industry and will be a big blow to US President Donald Trump, who has tried to protect the US oil by making plans with Opec and Russia to cut on production.
Most investors are now looking forward to the June contract, reducing trading volume and serving volatility.
The June projection contract for WTI entails selling below $22 a barrel, which is still 12% low on the day.