Key takeaways

• Exchange-traded funds (ETFs) that hold futures contracts on commodities are an important link between commodity markets and financial markets.
• When commodity storage capacity is constrained, investor flows into ETFs holding futures can lower, instead of raise, commodity prices due to potentially high costs of physical storage.
• April 2020 briefly witnessed negative prices for the nearest-maturity futures contract on WTI oil, possibly due to such a combination of storage constraints and investor flows into ETFs.