Economist warns WTI futures curve signals unexpected demand destruction across global economy

What was said

"The futures curve is positioned as if there's going to be an oversupply in the near term. Which is mind-boggling, because we went from a historic supply deficit to now the futures curve is almost in contango. It's only pennies away as of Thursday's trading, before the market shut down for the Independence Day holiday. The futures curve was right there. In fact, it was in contango part of the day, which is the market saying we've got too much oil."

Financial analyst Jeff Snider reveals that oil futures markets have shifted dramatically from steep backwardation to near-contango within weeks, despite ongoing supply disruptions in the Strait of Hormuz where only 30-40 ships per day transit versus 130-140 pre-war. Snider argues this indicates severe demand destruction rather than supply normalization, with the market pricing for oil oversupply despite historical supply deficits. He attributes this to front-loaded manufacturing activity creating a payback period coinciding with broader macroeconomic weakness.