US crude oil prices fell below $20 a barrel on Monday, close to their lowest level in 18 years, as traders bet production would have to shut to cope with the collapse in demand from the coronavirus pandemic. The global oil industry is facing its biggest demand drop in history, with traders and analysts forecasting crude consumption could fall as much as a quarter next month because of widespread lockdowns across the western world as the pandemic spreads.

The US oil benchmark, known as West Texas Intermediate or WTI, hit a low of $19.85 a barrel, losing more than 7 percent, before picking up to slightly above $20 in the European afternoon. Brent, the international benchmark, lost almost 13 percent to hit a low of $21.76 a barrel, the lowest since 2002. Oil prices have fallen more than half in the past month as widespread lockdowns in Europe and North America have slashed oil demand.

While demand has collapsed, the supply of oil has also increased rapidly because of the price war between Saudi Arabia and Russia. Saudi Arabia on Monday said it planned to raise exports even further, as its own domestic consumption drops during the pandemic. Traders now believe the surplus could approach 25m barrels a day next month, a level that could overwhelm storage capacity worldwide within weeks.

“This is a historic oil price collapse, and it is not done yet as the system physically runs out of places to put all the oil,” said Jason Bordoff, a former energy adviser to the Obama administration and the founder of the Center on Global Energy Policy at Columbia University. “The pain in the shale patch is going to be severe. We will see production  shut-ins accelerate.”

Prices are expected to remain under pressure until the market adjusts. Producers will probably be forced to close down output at a scale never seen in the modern oil industry. WTI briefly traded below $20 a barrel this month as the April contract expired, dropping violently in thin trading. But Monday marks the first time WTI has traded under $20 a barrel since 2002 in normal trading conditions.