The oil market is in for a violent shake-out

The crisis in the US oil market following the historic collapse of WTI May contract price into negative territory (minus $36 a barrel) at the threshold of contract expiry is something that was waiting to happen, given the market fundamentals.

The US continues to pump out humongous quantities of oil (12.3 million barrels a day) even as storage installations are overflowing and demand growth is non-existent. Although the US President played a catalytic role in bringing Saudi Arabia and Russia together for cutting output, the US itself has not participated in the OPEC+ decision to cut output.