Oil prices have dropped into negative territory, but futures pricing says that won't hold until fall

West Texas Intermediate crude oil is currently trading at less than $0.00 per barrel that will be delivered in May, the lowest ever barrel price, since the futures contract was launched in 1983.

However, that oil is predicted to cost upwards of $30 per barrel in November of this year. The Wall Street Journal explains that the oil market is currently experiencing a condition called contango, which means that “prices for a commodity are higher in the future than they are in the present.”

That expectation is the result of the current collapse of oil prices, along with the expectation that the economy will, for the most part, be running again in the fall.

One big reaction to this market condition is that oil barrels are being purchased simply to be stored and sold at a later date for a higher price. According to several analysts, there has been a significant increase in long term VLCC contracts signed over the past several weeks. A VLCC is a very large crude carrier, a type of ship that stores oil before delivery.