Why CME WTI oil futures are negatively priced

Clearly as per CME, the futures have a lower limit of 0.01.
Pls see the image
So, how come the price is negative? Can Anyone throw light?

My personal opinion, I may be wrong but just giving my view.This is for 1st time happening that prices are traded in negative. So tomorrow is expiry and it has to be physically settled, no cash settlement like in India. So, people holding contract has to take delivery of crude and clearly no one want to take delivery as there is no enough storage capacity and it involves transportation costs, storage costs insurance etc. Also many people trade to make some money but not to take delivery, normally airline industries or refineries opt for delivery but in current scenario there is no demand for airlines or industries or refineries.
Also many etfs trade in crude, they just buy and sell futures and are not allowed for physical settlement so they keep unwinding longs at what ever price available.
Already US storage capacities are near to equilibrium levels.
Also many people might have tried to trade the arbitrage available, means as current month is much lower compared to next month, I mean spread is much wider than any other time in history they tried buying current month and selling next month thinking the spread may come to it’s mean value but which never did. All these factors may have resulted to this scenario.Anyhow next month contract is trading above 20 usd as on now.


how will it impact the global market from here on? And how will Indian market react?

I don’t know much about it, may be some expert should answer.

@nithin request your view on this. Maybe create a post about the same.
Also I guess crude settled at 1usd at mcx . Did Traders margin covered this or were there open long positions on this from traders using zerodha or any other brokerages.

Also, assuming that the settlement of WTI Crude was at negative prices. How would it have impacted the buyers/sellers of crude contracts on MCX.

Not 1 usd, it is 1 Rupee. That is only interim settlement and mcx said final settlement may vary, it can go to -2800, means another 2.8 lakhs loss per lot for longs.

Around 11k change OI is there, so yes brokers will have open longs. We too have few, very little though compared to total OI.

@siva if prices are negative can we buy ? that means we get money to buy because prices are negative?

How can a commodity’s price go below zero?

Did you see a stock’s price go below zero?

Clear case of manipulation… And everybody is in on it… Making $$$ for themselves…

If there is any sense of morality left in the world… All trades below zero should be annulled and 1 cent should be the last price below which there can’t be any more down move.

Even the nifty option contracts stop at 0.05.

What moronic world we are living in… Just see the audacity of these manipulators


Please can you add details to the conspiracy theory… interested in knowing when did the exchanges release the lower limit to infinity.

Have saved few people even on the black monday occured earlier and now.

yes i forget that crude is cash settled in india which means brokers including zerodha allowed their clients to take positions in this contract , maybe you could have few negative balances on clients ledger. Don’t you think crude oil trading providing systematic risk to your business as well as whole ecosystem.

IMHO… all profits of these manipulators… who profited below zero… should be banned for life and governments should take away all of their profits of that trade…
That will teach them a lesson.

CME updated its systems to process negative prices earlier this month. In a notice dated April 8, it told clearing firms and clients that it had a plan in place “if major energy prices continue to fall toward zero in the coming months,” and if WTI crude oil, RBOB gasoline or heating oil futures fell between or below a certain range.

Yes, but that’s because you don’t have to take delivery of nifty. And even if you take delivery of stocks, it’s just a document. you can keep it anywhere. But, to take delivery of Crude Oil or any other commodity requires the necessary arrangement on your side.

That is why people who just bought it to trade on the market will not be able to take delivery, and are willing to pay a certain amount for someone else to buy the contract from them and take delivery. That is why it can go to negative, unlike Nifty or stocks.

Came across this illustration on a social networking site, might help.

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Most of the brokers stop to trading in crude oil in MCX volunmes are very less in 1k , so be careful stay away from commodities guys , its real remove the pant and shirts

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Longs got trapped bad, they were not willing to carry forward the contract over expiry (the cost of carry of the contract is high to current global scenario) and wanted to get the contacts taken off their hand at any price($39)

@prash_u Even taking delivery of crude oil by taking payment from producer is a totally crazy argument… for a common man to perceive…

I think the NEXT LEVEL of innovation (CRAZINESS) coming up in future could be negative prices for option contracts #sarcasm_intended :stuck_out_tongue: :stuck_out_tongue:

Crazy idea… isnt it ? People will try to pluck their hair and still wont be able to understand hahhah :laughing:

Haha no arguments there, but crazy for sure :wink:

And, still very very scary :neutral_face: