It was historical day yesterday. Prices of benchmark US WTI (West Texas Intermediate) May future contracts (NYMEX) first time in history turned negative and went as low as $-40.3 per barrel. June WTI futures traded around $16 per barrel (based on expectations that global oil demand will be available in June). This is ridiculous situation when sellers were actually paying buyers to take physical delivery of oil.
First time ever I’ve seen WTI futures contracts traded in minus zone. This happened because traders with long position must accept physical delivery of commodity if they don’t sell before the contract expires… As we all know oil trading is profitable game until prices touched $-40 per barrel. So, that who was speculating, didn’t need physical delivery of commodity and was ready to sell in any price.
Worldwide demand for crude oil is low because of covid-19 pandemic. There’s no clear understanding when global oil demand will be back to normal. Because of low demand and oversupply, countries running out of oil storage space. That triggered WTI May future contracts collapse and fall of main US indexes.
We live in unique time when oil is free but when you come to fuel station you will pay ridiculous amount per gallon. If you like my articles than please follow my blog.