As global markets buckle down for yet another week of complete liquidation, oil drillers, and refiners - both the big players and the small ones - are bracing for the worst.
Last time crude hit this lowest, U.S. oil producers entered survival mode back in 2016, reducing prices and employment, and drilling mechanisms. Yet there is not even a lot left to trim this time.
Over the course of several months, the oil price collapse of 2014-2016 occurred slowly. In just a few weeks, the 2020 crash unraveled and could end up being even more damaging.
Crude prices ended at a 4-year low late Monday, with US rates below $30 a barrel, falling in line with global equity plunging after an immediate interest rate cut by the US central bank.
Global standard Brent crude plunged more than 12.5 percent after the CFO of Saudi Aramco said the company is "very delighted" with a $30 a barrel of oil. Owing to global constraints to prevent the spread of virus, demand for fuels is dropping off a cliff, with gasoline futures hitting their lowest point since at least 2005.
IHS Markit expects the largest ever oil surplus to be two to four times higher than the 360 million-barrel surplus in 2015-2016. All of this comes at a time of tumbling global crude demand. Analysts also think the current decrease in demand for oil would turn out to be the most drastic downturn in history.
Trafigura, currently one of the largest independent oil traders in the world, also expects crude and oil consumption to drop by some 10 million barrels per day until the month of May, representing a 10 percent decline in overall global demand, signaling a scenario of doom for crude markets.
West Texas Intermediate oil delivery for April on the New York Mercantile Exchange plunged $3.03, or 9.6 percent, to settle at $28.70 a barrel after selling as low as $28.03.
According to Dow Jones Market Reports, the settlement was the lowest for a front-month contract since February 2016. May Brent plunged $3.80, or over 11 percent, to $30.05 a barrel on ICE Futures Europe - the lowest finish since January 2016.
Even a massive emergency move by the central bank to hedge the world's largest economy added to the jitters gripping the commodity markets.
Outlook for worldwide oil consumption is being reduced significantly as government efforts to combat the spread of the virus limit the movement of people and goods and throw supply chains into chaos.
