April 21, 2020 – The Hill
Why oil prices fell into negative territory — and why it might happen again
By Rebecca Beitsch
Oil prices rose back into profit Tuesday after dipping into negative territory for the first time in history on Monday. But the rebound may be short lived as a lack of storage space could push markets to a similar crash within the next month…
Read the full article here: https://thehill.com/policy/energy-environment/493984-why-oil-prices-fell-into-negative-territory-and-why-it-might-happen
…Part of what fueled negative pricing is the contract basis on which oil is purchased. Traders had until Tuesday to buy and sell contracts for May, leaving those in financial markets at risk of having to take physical possession of thousands of barrels of oil.
“Once the month rolls, if you haven’t closed out your positions, you’re expected to go to delivery, and if you’re not involved in the physical market and have no means to make or take delivery, you’re caught at whim of those who trade in both the physical and financial markets, and that’s what caused the negative pricing,” said David Braziel, president of RBN Energy.
