Few industries have been more brutally pummeled by the coronavirus pandemic than the oil business. Huge declines in demand have threatened the survival of many oil companies and are even threatening to destabilize oil-dependent foreign governments. The resulting price shock sent the price of oil below $30 per barrel.
An extensive report published by Knowledge@Wharton notes the negative price shock occurred in the wake of anxiety that had gripped traders and investors over reports that storage capacity was running perilously short at Cushing, Okla., the sole delivery point for West Texas Intermediate crude. The impulse was a rush to sell. The panic over the shortage of storage capacity led to a rush to dump futures contracts, observes Charles Mason, University of Wyoming professor of petroleum and natural gas economics.
The April 20 price crash “emphasized how much oversupply there is at the current time,” says Wharton finance professor Jeremy Siegel. “It was a te
