The May 2020 futures contract expires on April 21st, but nobody wants the oil!
Attached is a chart of trading today in May 2020 crude futures. Amusingly enough, Interactive Brokers doesn’t support negative price quotes, so I couldn’t chart it through TWS:
I have never seen anything like this before in my life – you buy a contract for 1,000 barrels for negative $40. The counterparty pays me $40,000 and I take delivery of 1,000 barrels of crude oil. I then go light it on fire.
What a strange, strange world we live in.
So how many contracts did you buy. I have a nice sized pool (95,000 Liters) I can loan you the use of. But I get to light it on fire.
Whats the easiest way to profit from this madness, in your view?
If you were in any capacity to store it, you’d get your miracle fill at $-40 but then again, that’s why they are trading negative in the first place, nobody has the storage!
You better make sure you take delivery in a banana republic somewhere. You’d be liable for up to a $1M fine and/or 6 months in jail if you light it on fire in BC 🙂
Sadly the only option I can seem to find is taking delivery at Cushing, OK instead of the “banana republic” choice!
i found this writeup to be a really good explanation of how this happened: https://blog.gorozen.com/blog/negative-oil-prices-how-it-happened-and-resulting-implications
Interactive Brokers Group, Inc. (Nasdaq: IBKR) today noted that, as has been widely reported, the energy markets yesterday exhibited extraordinary price activity in the New York Mercantile Exchange (NYMEX) West Texas Intermediate Crude Oil contract. The price of the May 2020 contract dropped to an unprecedented negative price of $37.63. This price was the basis for determining the settlement price for cash-settled contracts traded on the CME Globex and also on a separate, expiring cash-settled futures contract listed on the Intercontinental Exchange Europe (“ICE Europe”).
Several Interactive Brokers LLC (“IBLLC”) customers held long positions in these CME and ICE Europe contracts, and as a result they incurred losses in excess of the equity in their accounts. IBLLC has fulfilled the firm’s required variation margin settlements with the respective clearinghouses on behalf of its customers. As a result, the Company has recognized an aggregate provisionary loss of approximately $88 million.