A pumpjack operates above an oil well at night in the Bakken Formation on the outskirts of Williston, North Dakota, U.S., on Thursday, March 8, 2018.

The action Monday in the most closely watched energy market in the world was devastating, as the value of the May oil futures contract plummeted 300 percent, flipping into negative territory to end at minus $37.63 per barrel. The price action was unprecedented , and hard to explain but it was also a wake up call for an industry that is likely to see much more pain ahead.

There's too much oil, and nobody wants to buy any more. Planes aren't flying, shipping has slowed, and U.S. consumers, who use 10% of the world's oil output in their cars, are now staying at home.

The oil industry is in its worst crisis since at least the Great Depression, according to analysts.

One reason the CME's May contract for West Texas Intermediate plunged was well understood.

There is simply a basic lack of storage capacity in the world for crude. As the contract expires, nobody wants to take delivery of the physical product. But that's not a satisfying explanation for such a bizarre price reaction, and there was speculation it was the result of hedging gone wrong or even some exchange traded funds behind the sell off.

The end result is that the industry now has had a warning that it needs to seriously curb drilling and unwinding the supply glut could be more difficult than expected. The May contract, which expires Tuesday, was the only one to trade in such erratic fashion, but the June contract was down 15% and was trading around $21.40 per barrel Monday afternoon. Brent futures, the international benchmark, were trading at about $25.90 per barrel.

But in the spot market, North American regional prices reflected the problems producers were having unloading landlocked crude in a market with no buyers. Louisiana light sweet crude was selling for a little over $5 a barrel but crude in the Bakken region in North Dakota was selling for negative $38.63 a barrel.

"The world has never come to a halt like it has in the past few weeks," said Francisco Blanch, global head of commodities at Bank of America. "60% of oil demand comes from transportation. Gasoline sales are down more than 50%. Flights around the world are down 80 or 90%. The collapse in consumption is mobility driven. That's what makes this crisis different than the great Depression."

Blanch said the normal market mechanism of consumers stepping in when prices fall is not working because of the virus shutdowns. "Producers are now being sent the harshest signal ever to react to the crisis," said Blanch.

Dan Yergin, vice chairman of IHS Markit, said there were two other times when WTI oil futures collapsed amid shortages of places to put it. But then prices fell to just under $10, and it was very different then.

"You ran out of storage and prices fell. The difference was in 1986 and 1998, demand was going up. This is with this demand collapse. We're on a planet we've never been on before.. This will end and demand will come back. A lot of it is up to public policy and a lot of it is up to the virus itself," says Yergin.

Just months ago, the American oil industry was on the top of the world. The price of oil was ticking up around $60 a barrel at the beginning of the year, and America was pumping more oil than any other country, surpassing both Russia and Saudi Arabia.

But the coronavirus outbreak in China overtook the good news story of an interim U.S.-China trade deal that would help global growth, and instead resulted in a steep drop in demand. The oil industry didn't stop pumping, and the world became more oversupplied with oil.

To make matters worse, Saudi Arabia and Russia failed to broker a new deal on oil production cuts , and as a result Saudi Arabia ramped up its production in March. They have since agreed to a new OPEC+ cut of 9.7 million barrels, but that is not expected to be enough to allow the world's oversupply to drain away.

"It's one thing to make a deal. It's another thing to find some place where you can still store oil," said Yergin. "The deal was meant to buy time, but buy time over a period of time. The deal doesn't magically solve what's happening today."

The deal was expected to begin in May, but Reuters reported from sources that Saudi Arabia would start sooner.

"This month is going to be a high tide of oil that's going to swamp storage. Storage was once a logistical tool, and now it's become a prized commodity," Yergin said. He said oil production reached its pinnacle at 13.1 million barrels a day in February, and he expects it to drop by 2.9 million barrels a day by the end of the year.

Yergin said it's been clear for awhile that the storage was running out and that by the end of April, there would be no where to put any crude.