Oil below zero: 20 April 2020
Understand how futures expiry and physical delivery broke the idea that a price cannot go below zero.
Module 25 of 26, When it goes wrong: real blowups. Lesson 4 of 6, about 14 minutes.
The takeaway
Physical delivery is real. When a futures contract can’t be rolled and storage is full, price can go negative because selling off the obligation has value to someone.
This page is a public summary. The full lesson has the worked examples, an interactive exercise and a short quiz, and sits in the course. Lessons 1 and 2 of Module 1 are free and the rest need a pass.
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