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On Monday, April 20, 2020, the price of oil traded deep into the red falling below zero for the first time ever shocking even the most seasoned energy traders and oil executives.
What happened? The market was well aware the coronavirus has decimated demand across the globe as economies have come to a screeching halt but was that enough to push crude into negative territory?
FOX Business takes a look at what drove the price into a freefall and if it can recover.
Oil Falls Below Zero
During Monday's session, West Texas Intermediate crude oil futures for May delivery cratered by 305 percent to -$36.73 a barrel. At any price below zero, buyers are paid to take delivery as there are costs associated with transportation and storage. WTI closed at its lowest level since recordkeeping began in March 1983, according to Dow Jones Market Data.
OIL CRASHES 305% NOW -$36.73 A BARREL
It is unclear whether there was a specific catalyst that sparked the sharp one-day selling, but President Trump remarked the decline was a once in a lifetime event.
"Nobody has ever heard of negative oil before but it is short-term," said Trump on Monday.
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What Drove Crude's Collapse?
Along with practically no global demand, there is plenty of supply. OPEC and the United States, are also to blame says Phil Flynn, senior market analyst at the Price Futures Group and a FOX Business contributor.
“This is a disaster because OPEC did not act fast enough to cut production, it is a disaster because U.S. producers did not pull back fast enough and it’s a disaster more than anything because this a snapshot of what the world looks like when it stops, when economic growth grinds to a halt,” Flynn explained.
Demand Disappears, Global Economy on Hold
To follow up on Flynn's observation, the coronavirus pandemic has pushed most of the world's population, give or take a few countries, into self-quarantine. Airlines have cancelled thousands of flights, cruise lines are idled, hotels and stores are closed and most employees, with the exception of essential personnel, are working from home and not driving.
"Let's not sugar coat this, this is not a recession, this is a depression, so there are 22 million Americans that lost their jobs over the last four weeks. That translates to 15 million Americans who are not driving to work each day" said Stephen Schork of The Schork Report in an interview with FOX Business.
It still remains unclear when the U.S. economy will return to a fully functioning entity nationwide.