New York CNN Business  — 

President Donald Trump’s victory lap for convincing Russia and Saudi Arabia to cut production looks awfully premature.

US oil prices plunged another 8% Friday, finishing at a fresh 18-year low of $18.27 a barrel. At one point, crude dropped to $17.33 a barrel – the weakest price since November 2001.

The accelerating crash in the oil market reflects a realization that the record-setting OPEC+ output cuts aren’t nearly enough to offset the epic collapse in demand caused by the coronavirus crisis.

Crude skyrocketed to $28.34 a barrel on April 3 after Trump signaled Saudi Arabia and Russia would make massive production cuts. After OPEC+ eventually agreed to those cuts last weekend, Trump thanked Russian President Vladimir Putin and Saudi King Salman for settling their recent price war.

“This will save hundreds of thousands of energy jobs in the United States,” Trump tweeted Sunday.

Yet crude has renewed its selloff in recent days and is now down 36% in the two weeks since that April 3 peak. Since hitting $63.27 a barrel in early January, US crude has lost a stunning 71% of its value.

Friday’s selloff was a bit bizarre, though. While US oil prices tumbled, Brent crude – the global benchmark – rose modestly.

Although the front-month April contract for US oil plunged, the May contract held up well. The April contract expires early next week.

Analysts said that this wide gap between contracts could continue throughout the year because the world is quickly running out of traditional storage space for oil. That will force oil companies to pile up barrels in more expensive places, including on ships. And the wider the spread, the more economical these alternative storage options will be.

“Until the lockdowns are removed and production cuts kick-in, the market has to find a home for these barrels,” said Ryan Fitzmaurice, energy strategist at Rabobank. “To do that, you have to incentivize people to get creative with storage.”

Barrels have been piling up up at an unprecedented pace, raising the risk the world will soon run out of space to store it all. The number of oil barrels in commercial storage spiked in the latest week by the most on record, a US Energy Information Administration report earlier this week showed.

“At that pace, storage capacity will be full in the not too distant future,” said Fitzmaurice.

Supply-demand nightmare continues

One major problem is that even though OPEC+ reached an historic agreement, the effects of the oil price war linger. Barrels continue to flow to the United States, inundating the market.

The seven-day rolling average of exports from core OPEC nations and Russia has surged by 3.5 million barrels per day in April compared with March, according to ClipperData.

At the same time, demand has fallen off a cliff. Social distancing guidelines have shut down many passenger flights, forced people to work from home and shuttered factories. That means there is less appetite for motor gasoline, jet fuel and other oil products.

Sub-$20 oil is a nightmare for high-cost US shale oil companies, especially the ones that took on piles of debt to pay for drilling projects that are now uneconomical. Many will be forced to shut down production, dealing a huge blow to the US oil boom.

Rystad Energy recently estimated that 140 US oil producers could file for bankruptcy this year if oil stays at $20 a barrel, followed by another 400 in 2021. That would cause countless jobs to disappear.