How much blood will be on the street b/c of Crude Oil?
Bankrupt trading firms
NYMEX — margin calls not met
Futures Commission Merchants
This is going to be ugly. Books will be written about today. $CL_F pic.twitter.com/toADhdLWC2
— Peter Brandt (@PeterLBrandt) April 20, 2020
Today’s Chart of the Day was shared on Twitter by Peter Brandt (@PeterLBrandt). It’s a chart of the May 2020 Crude Oil futures contract over the past month. Crude Oil futures imploded today. The May contract plummeted into negative territory for the first time ever, reaching as low as -$40 per barrel. This bizarre and unprecedented move essentially means that futures traders must decide between accepting physical delivery of 1,000 barrels of Crude Oil per contract or exiting their position at a massive loss. Since most traders are not willing or able to physically store that much Cude Oil, the obvious choice is to exit their position, causing forced selling. To be clear, this contract expires tomorrow, and the June contract is still trading above $20 per barrel. None the less, this is truly historic price action. As Peter points out, there will likely be some negative implications as a result of today’s bloodbath. Peter was way ahead of this crash. At the end of February, he pointed out that price was breaking below a key support level around $50 per barrel…and here we are.