Last week, the quantity of oil in the global supply pipeline was so high that some traders were willing to pay anyone who promised on April 20 to lift oil a month later. Oil traded at a negative price on a one-month West Texas Intermediate (WTI) futures contract, but it didn’t for successive months’ futures contracts (chart 1).
But the blip nevertheless confirmed the oil shock that will play out in the near future due to lower demand post-Covid-19 menace. The world is known to oil shocks (chart 2), and India bought oil at $16 on April 21, the lowest in almost five decades (chart 3), due to depressed benchmark prices.
