<P> A classic example of taking on too much risk through hedging is the 1982 collapse of Penn Square Bank caused by plummeting of the price of oil in 1981 . Penn Square Bank had lent too much to Exploration and Production E&P operators . Penn Square Bank caused the failure of Seafirst in 1982 and then Continental Illinois . When they failed and were liquidated by the Federal Deposit Insurance Corporation (FDIC) the non-bank buyers or participants of bank energy credits of these leveraged loans participants were considered by to be' unsecured claims,' not' true sales' and they were not able to collect any capital . </P> <P> At the 5th annual World Pensions Forum in 2015, Jeffrey Sachs advised institutional investors to divest from carbon - reliant oil industry firms in their pension fund's portfolio . </P> <P> Because of oversupply and lack of agreements between oil - producing countries members of the OPEC (Saudi Arabia in particular, which pumped at world's records) and also because of lack of coordinated efforts between OPEC and Non-OPEC countries (Russian being a big player, refusing to reduce production) the price of oil fell rapidly in 2015 and continued to slide in 2016 causing the cost of WTI crude to fall to a 10 - year low of $26.55 on January 20 . The average price of oil in January 2016 was well below $35 . Oil did not recover until April 2016, when oil went above the $45 mark . </P> <P> By 20 January 2016, the OPEC Reference Basket was down to US $22.48 / bbl--less than one - fourth of its high from June 2014 ($110.48), less than one - sixth of its record from July 2008 ($147.27), and back below the April 2003 starting point ($23.27) of its historic run - up . </P>

When did the oil prices start to drop