A week after Saudi Arabia and Russia agreed to sizeable production cuts in a bid to prop up crude prices, the value of West Texas Intermediate (WTI), the US benchmark, slumped into negative territory, with US storage facilities swamped by rising stockpiles of crude.
With markets in turmoil, producers have been forced to pay oil trading companies to take the glut off their hands, as refineries put on the brakes and motorists stay at home. May futures for WTI (expiring 21 April) closed out at negative $38.23 (£31) a barrel, while June futures were also under pressure despite the widening of the spread with the prior-month contract.
Future prices are expected to outstrip the current rate. So with the market in contango, there is every chance that the spread on long-dated (Q3 & Q4) futures will continue to widen, providing a potentially lucrative opportunity for oil trading companies with access to alternative storage facilities, or even seaborne capacity.