The {negative} pricing was a temporary dislocation caused by brokers auto liquidating long positions at market into a super thin market. Why was the market super thin? Because there was zero Commercial interest on the Buy side so close to first notice day for a product they don’t want to take delivery of - and speculators with half of a brain were already trading the far more liquid and populated June contract.
Some thoughts on negative oil price
- Thread starter traderDS
- Start date
According to the EIA, WTI spot was -36.98 vs -37.63 settlement for CL May20 on Mar 20. They should come close to converging as WTI front month expires.
https://www.eia.gov/dnav/pet/hist/rwtcD.htm
https://www.eia.gov/dnav/pet/hist/rwtcD.htm
Traders were selling his penny bid (212x) on IB and simultaneousy buying -$4.00 on TT (Trading Technologies). I think IB should eat all of it, considering their platform was giving misleading prices the whole way down. IB's founder, Thomas Peterffy, is worth $15 Billion and could cover IB's $88M total WTI losses himself.
Super Mega Day Trader Award
goes to
Syed Shah, 30 years old day trader for trading
- very hugh quantity of > 200 crude oil contracts
- on the last day of Expiring Contract
- against the down trend & not knowing counter trend vs reversal
and attempting to receive millions of barrels of physical crude oil
Right after the negative price settling, I received notice from several of my trading platforms that the June contract would be closing only, treated as expiring contract much earlier than normal. This, I guessed, would lead to a buy only to cover shorts and no shorts jumping in, thus continuous rise of the price. I quickly cancelled my option spread offer for much lower price for the contract. I was right in my intuition, the price shoot up continuously since with little looking back.
The negative price with these platforms not being able to quote the correct price is the first blow, the change of trading limitations by these large platforms is the second blow. CL is forever deleted from my swing trade list, I will only trade scalping intraday, if at all. But I am a retail small trader of CL, not the trend maker. But I have made my choice.
The negative price with these platforms not being able to quote the correct price is the first blow, the change of trading limitations by these large platforms is the second blow. CL is forever deleted from my swing trade list, I will only trade scalping intraday, if at all. But I am a retail small trader of CL, not the trend maker. But I have made my choice.
Seriously - who TF buys 212 WTI futures contracts outright with $77K in their account... Never mind the screen pricing disparity - IB Risk Controls should never have allowed him to do that in the first place. And he personally knew better as well. It isn't just IB who was at fault here.
Ironically, if IB had their shit together he probably would have panicked to sell out of everything as soon as he saw a negative print, after thinking he just bought the absolute low a few seconds earlier.