The June 20 future contract on Tuesday, April 21, opened at US$21.27. It briefly went to its high of US$22.56 before drifting lower as time passes. At this moment while I was writing, the June contract has dropped to US$11.89 earlier and is rebounding now to US$14.08. Very very volatile indeed.
The sharp plunge of crude oil price on the expiry of May future contract reflected the acute problem of shortage of storage facilities. Upon expiry of the May contract by Tuesday, the long positions are obliged to take physical delivery of crude oil. If they knew very well that they won't be able to find storage facility to store the oil the only way out is to square their position and take the losses.
Will the price turn negative again in one month time when the June future expired? Possible if the Covid-19 lockdown continues and the crude oil demand remains depressed and with no drastic cut down of production. But don't expect those with long positions to wait until the last 48 hours before the expiry date to take whatever necessary action like what has happened yesterday and what is happening today.
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