Oil prices began crashing on Thursday afternoon, falling nearly 9%. WTI Crude slid 8.68% to $60.00 per barrel, while Brent Crude slipped 8.01% to $62.55 per barrel. It is the biggest drop in absolute terms since April 2020, when oil slipped into negative territory.

Analysts have been volleying predictions during the recent price rally, with bulls signaling there is more room to run, making proclamations of a coming super cycle. Others, more cautious in their outlooks, have warned for a couple of weeks that the optimism present in the oil markets were unjustified. The recent rally was largely on the back of OPEC+ production cuts—or rather, the fact that they agreed to hold production steady in April, instead of ramping up production as the market had anticipated. The passing of the 3^rd round of stimulus in the United States had also bolstered oil market sentiment.

But a rising dollar, increased crude inventories in the U.S., growing fears of a resurgence in coronavirus cases and vaccine safety concerns in Europe have proven worthy adversaries. Those concerns are linked directly to oil demand resurgence. And markets are viewing this demand picture as less favorable today, as shown by crude futures which show the market backwardation is waning.

WTI’s front-month contract is once again trading at a discount to the following month. Crude oil WTI April contract is now trading at $59.46 per barrel, while the May contract is trading at $59.57. WTI’s April contract is now down $5.14 on the day.

This is the fifth day in a row for oil price declines and the biggest drop in absolute terms since Apr 2020