The price of a barrel of the benchmark US oil plunged over 300 percent on Monday to settle at -$37.63, a troubling sign of an unprecedented global energy surplus as the coronavirus pandemic affected economic activity.
However, it rebounded on Tuesday, with the US crude turning positive.
In an interview to CNBC-TV18, David Lennox, analyst at Fat Prophets, spoke at length about the collapse in the US oil overnight.
Lennox said that the collapse and destruction of demand due to COVID-19 led to a sharp decline in oil prices.
Lennox said that according to traders, the storage facility was almost full in the US. He, however, added there is still 60 million barrels of oil going into the market daily.
“If you cannot store oil then you cannot pump that out of the field. So you got to switch off production completely and that’s what most producers do not want to do... If you switch production off completely you are not going to get any revenue and the whole industry inside the US would likely start to collapse,” he said.