Oil flips into contango, indicating months of surplus

Benchmark Brent crude has not been in contango since July 2019. On Tuesday the benchmark was in contango for as much as $0.40 a barrel between prices for closest trading month April and August. For U.S. West Texas Intermediate (WTI) crude the contango between March and July prices was $0.60 a barrel. (File pic shows oil storage at Cushing, Oklahoma)

LONDON: The oil market looks set for at least four months of depressed demand because of China's coronavirus outbreak, with a large crude surplus not expected to clear at least until August, analysts and traders said.

Fears of a virus-related slump in global energy demand have flipped the market into contango this week - a structure in which longer-dated oil futures trade at a premium that encourages traders to keep crude in storage for more profitable resale in the future.