Market history · Commodities ·
Oil prices go negative
On 20 April 2020 the price of the front-month US WTI crude futures contract settled at about minus $37 a barrel. Demand had collapsed with lockdowns, a price war between Russia and Saudi Arabia had flooded the market, and holders of expiring contracts could not find storage.
It was a technical squeeze in one contract rather than a sustained price for oil, but it exposed the mechanics of futures-based funds and the physical constraints beneath commodity prices.
The takeaway
Exposure through a futures-based product is not the same as owning the underlying asset.
This is a retrospective about a past event, provided for general information. It is not investment advice, does not describe RockLake's positioning at the time, and past performance is not a guide to future performance. Read the risk warning.