The precipitous drop in the West Texas Intermediate (WTI) crude oil price deep into negative territory on April 20, 2020 was an unprecedented event in global oil markets. The move was technical, but the underlying structural issues, and demand and supply dynamics caused by the COVID-19 pandemic, will continue to affect oil prices in the months ahead, notwithstanding agreed cuts by OPEC+. Industry forecasts suggest that while any recovery in demand in H2 2020 may provide some support for oil prices, the amount of excess inventory would put a ceiling on those prices. Indeed, the crude oil inventory built up in recent months has led to a shortage of land storage facilities as well as tankers, which are being used to store record amounts of crude oil at sea.
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