Oil Prices 2020: The Historic Negative WTI Crash Explained — NRG-IA

The physical bottleneck in Oklahoma and the negative WTI oil price — what happened West Texas Intermediate (WTI) crude oil prices plummeted to an unprecedented historic low of minus $37.63 per barrel on April 20, 2020, according to documented analysis by Investopedia. This unprecedented event in the modern history of financial markets demonstrated that under conditions of extreme overproduction and saturated storage, holding physical crude oil can become a major financial liability for traders. In practice, sellers were willing to pay buyers to take the goods off their hands. The technical crash was triggered by the expiration of the May 2020 futures contracts. Investors holding these financial contracts were legally obligated by market mechanisms to take physical delivery of the crude oil at the storage hub in Cushing, Oklahoma. With global storage capacities near total saturation, buyers preferred to accept massive losses and pay record sums to escape the physical delivery…