The cost of buying a barrel of Canadian oil fell to less than a Barrel of Monkeys on Thursday as the oil price again crashed to record levels.

Western Canadian Select (WCS) was selling for $6.45 US a barrel Thursday, down $2.84 US from a day earlier. That's below last week's record when it sold for as low as $7.63 US a barrel.

The WCS price averaged $36.82 US a barrel in January, according to the province.

To put that into perspective, a barrel of Alberta oil is now worth $9.08 Cdn, which is less than a Barrel of Monkeys Game, a litre of Petrelli Extra Virgin Olive Oil or a 30-gram tube of Polysporin, each $9.99 at London Drugs.

The impact of plunging prices has forced a number of Canadian oil producers to slash their capital spending plans this year and trim back production.

But some analysts believe oil prices could still get much lower.

"Crude from Canadian oil sands could well approach zero over the coming weeks," says a research note from JBC Energy.

"Even if cash returns turn negative, it is not a given that production will be shut in, especially in heated reservoirs at Canadian oil sand plays. But this time the situation is simply radically different."

Others say oilsands bitumen is already worthless. That's because WCS is a blend of bitumen and an ultra light oil that helps move the oilsands product through a pipeline. Right now, the ultra light oil is worth considerably more than WCS, which implies the value of bitumen is lower.

"Looking at bitumen pricing, it is zero to negative. So, it's as worse as it gets," said Martin Pelletier, a portfolio manager with TriVest Wealth Council in Calgary.

"The longer it sustains itself, it will be catastrophic for Alberta, and not just Alberta, but the rest of Canada."

The industry is on 'pins and needles' waiting to see what kind of relief package Ottawa will unveil., according to Martin Pelletier with TriVest Wealth Counsel. (CBC)

Oil and gas remain one of the country's top exports, contributing significantly to government revenues. The oilpatch is waiting to see what kind of relief package the federal government will provide.

"It's all hands on deck for a number of these companies. It's survival mode," said Pelletier.

The price of West Texas Intermediate, the North American benchmark, also fell on Thursday, to $22.60 per barrel, down $1.89 US a barrel.

Oil prices are being hit by a vicious double whammy: a crude price war between Saudi Arabia and Russia, and plunging demand as COVID-19 crushes consumption.

Rystad Energy, a Norway-based energy research firm, says the situation has created such a large global surplus that Western Canada's oil production will need to be cut by some 11 per cent, or 440,000 barrels per day.

The country is days away from running out of available storage capacity, it said.

The impact isn't just being felt by oil companies but governments as well.

"Lower oil isn't good for Canada's trade balance, and the Alberta economy will take yet another hit," according to a research note from BMO's Benjamin Reitzes.

"One more reason to wonder why the Bank of Canada has held off on cutting rates further, leaving policy rates as the highest in the developed world."