20 April 2020: US oil prices go negative
On April 20, 2020 the May contract for West Texas Intermediate crude settled at about minus $37 a barrel. With the pandemic crushing demand and storage tanks nearly full, holders of expiring futures had to pay others to take physical oil off their hands. Some retail investors in oil funds learned the hard way how futures contracts work. Prices recovered within weeks, but the chart point became legend.
The lesson: Understand the instrument as well as the asset; how you hold something can matter as much as what you hold.
What it meant for investors
$1,000 in Crude oil (barrel) at the start of 2020 → $1,066 today, vs $2,092 in the S&P 500.
We start the clock at the start of 2020, the year it happened. That is 1.1 times the money, but $1,027 less than a plain index fund made over the same years.
What Crude oil (barrel) teaches: You cannot easily own oil itself, only futures contracts; the negative print of April 2020 showed that storage and contract mechanics can dominate supply and demand.
| Bought in | Price then | Worth today | S&P 500 would be |
|---|---|---|---|
| 2015 | $50.00 | $1,300 | $3,301 |
| 2018 | $60.00 | $1,083 | $2,519 |
| 2020 | $61.00 | $1,066 | $2,092 |
green = beat the S&P 500 · red = lost money
What if you bought Crude oil (barrel)? Every starting year and the full story →
More Crude oil (barrel) history
- 17 January 1991: Oil collapses as Desert Storm begins
- 20 March 2003: The Iraq War begins
- 11 July 2008: Oil peaks at $147 a barrel
- 29 August 2005: Hurricane Katrina hits the Gulf Coast
- 17 October 1973: Arab oil producers wield the oil weapon
- 26 November 2021: Omicron spoils Black Friday
Could you have called it at the time? The wheel picks the year, you pick the position, ten seconds a pick.
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