Is Volatility In Oil Prices Behind Us?

in #money4 years ago

April 20, 2020, will go down in history as a watershed event in the crude oil futures market. Crude oil futures on NYMEX started trading in 1983. In 1986, the price of the nearby futures contract fell to a low of $9.75 per barrel, which stood as the bottom for 34 years. On April 20, the expiring May futures contract declined below the 1986 low, fell through zero, and reached -$40.32 per barrel. The lack of storage caused the price of crude oil for nearby delivery to become a bearish hot potato.

A negative price for one of the world’s most liquid commodities has wide-ranging ramifications for a host of other markets. When it comes to the ETF and ETN products that track the price of crude oil, the assumptions of the past are now questionable. The United States Oil Fund, LP (NYSE:USO) sought to replicate the price action in the nearby NYMEX crude oil futures contract. However, the price action on April 20 changed that because the ETF cannot trade below zero.

June Crude Oil Falls To Single-Digit Price And Recovers

April was a wild month in the crude oil futures market. June NYMEX futures traded in a range from $6.50 to a high of $33.15 over the month or $26.65. From high to low, the continuous futures contact’s range was from -$40.32 to $29.13 or an incredible $69.45. The price of June futures was bumping up against the $20-per-barrel level at the end of last week.

(Image not shown due to low ratings)

(Image not shown due to low ratings)

(Image not shown due to low ratings)


Images were hidden due to low ratings.
Sort:  

Source
Copying/Pasting full or partial texts with adding very little original content is frowned upon by the community. Repeated copy/paste posts could be considered spam. Spam is discouraged by the community and may result in the account being Blacklisted.

If you believe this comment is in error, please contact us in #appeals in Discord.

Hi! I am a robot. I just upvoted you! I found similar content that readers might be interested in:
https://etfdailynews.com/news/is-the-volatility-in-oil-prices-behind-us/