May WTI Futures Close $37.63 Lower

Brian L Milne
By  Brian L. Milne , DTN Refined Fuels Editor

CRANBURY, N.J. (DTN) -- Eight days following the largest coordinated production cut on record at 9.7 million barrels per day (bpd) agreed to by OPEC+ on April 12 along with four governments using their strategic storage to aid commercial participants and economic-driven production cuts outside of OPEC+, the U.S. crude oil futures benchmark registered a historic decline to what once might have seemed an unfathomable more than 300% drop to settle at -$37.63 barrel (bbl).

May West Texas Intermediate futures lost $55.90 bbl at settlement ahead of expiration Tuesday afternoon, and traded at a -$40.32 bbl low on the session. The WTI contract turned negative during market-on-close trade, and with blistering speed, punched out the record book negative settlement amid forced long liquidation. Stunned market observers now wonder how the May contract will perform during its final trade day Tuesday.

Never before has there been as stark a lesson of the danger in holding a position in a contract into its expiration when a lack of buying is possible as Monday. Those hoodwinked by the OPEC+ deal against demand loss as high as 35 million bpd this month due to efforts to slow the COVID-19 pandemic found themselves in a harrowing position and were forced distressed sellers.

The May WTI contract has trade volume of 152,815 contracts late afternoon in ongoing trading following settlement, which compares with volume for June WTI futures at 1,116,714 and counting.

June WTI futures settled down $4.60 at $20.43 bbl, with the July contract ending at $26.28 bbl in the super-contango market. July WTI futures volume was at 279,229 late afternoon.

Intercontinental Exchange June Brent futures settled down $2.51 at $25.57 bbl, widening its premium to June WTI to $5.14. NYMEX May RBOB futures settled down $0.0424 at $0.6683 gallon, and May ULSD futures down 6.85 cents at $0.8878 gallon, paring a decline to a $0.8855 51-month low on the spot continuous chart.

Brian L. Milne can be reached at brian.milne@dtn.com

(BAS)

Brian Milne