Negative Oil Prices

Updated: Oct 21, 2020

Publisher: Priyadarshi Kirti Gourav

Suppose you are a trader in Futures Market who deals in Exchange Trade Commodity. Now due to uncertainty in the market, the demand for that good falls and you know that there will be physical delivery of that commodity, once the trading window is closed. With “constrained storage capacity” and few days for the trading window to close, what will you do as a trader? Will you trade those futures at any price (positive or negative) possible or will you take the delivery and store it where the cost of storage is higher than the gains from the futures contract?

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