There is an investment company that made a big profit by making the futures price of crude oil negative
In April 2020, the futures price of crude oil closed with the '
Oil's Plunge Below Zero Was $500 Million Jackpot for a Few London Traders-Bloomberg
https://www.bloomberg.com/news/articles/2020-08-04/oil-s-plunge-below-zero-was-500-million-jackpot-for-a-few-london-traders
On April 20, 2020, New York crude oil futures (WTI futures) closed on that day at 'minus $37.63 per barrel (about 4050 yen)'. The fact that the crude oil price has become negative means that the seller of the crude oil has to pay a fee of about 4050 yen per barrel of crude oil, rather than receiving the price.
Crude oil futures prices have closed for the first time in history, oil producing countries are collaborating to reduce production, but demand is drastically decreasing-GIGAZINE
The unprecedented situation that the price of crude oil, which is a resource, has become negative, the owners and investors of oil companies all over the world twist their heads, but in such a small investment company ``Vega Capital'' based in London, England. 'London' made a profit of 500 million dollars (about 52.7 billion yen) on this day alone. The actual situation is unknown because only the contact information is posted on Vega Capital London's official website , but according to research by Endole , a company information researcher, Vega Capital London was established in 2016 and has 10 employees. I know it's a small company that is less than enough.
According to a person who sent information to Bloomberg on condition of anonymity, it is known that about 10 traders set up a crude oil sale around 14:30 on April 20. “These transactions are the usual way Vega Capital London uses,” said another person, but unlike today, the new coronavirus infection (COVID-19) impacted fuel demand. In addition to being disrupted, WTI crude buyers were running out of space in crude oil storage in Cushing, Oklahoma to receive physical oil.
As a result of these overlapping conditions, crude oil literally “overflowed” and was in an oversold state, which was all about the negative price of crude oil futures. Vega Capital London took advantage of this situation, as the sharp decline in crude oil prices caused US and Chinese investors who were investing in products linked to the liquidation price of crude oil futures on April 20 to a large extent. Is said to have succeeded in making a big profit.
Terence Duffy, CEO of the Chicago Mercantile Exchange , said the futures price was fully functional, saying the price of crude oil futures was negative, and the crash is a natural consequence. I showed the view.
But Joe Cisewski, a special adviser to Better Markets, a nonprofit that calls for tighter regulation of financial transactions, said, ``We believe that the anomalous situation of negative oil prices was the result of a balance between supply and demand. Is a silly Yota story.' He demanded a detailed investigation for oil producers who were in serious financial trouble due to the market turmoil.
If Vega Capital London made a deal by seeing a drop in crude oil prices, it would not be an unjust profit. However, one oil investor who responded to Bloomberg interviewed traders closely related to Vega Capital London, interacting through golf and ski trips, and trading at the same time to have a great influence on the market. I testify that there is.
The peculiarities of crude oil futures trading are also believed to have spurred the situation. One of the trading methods supported by the
It may seem strange to trade before the price has been decided, but the settlement value in TAS trading usually falls within a range of prices that is in balance with the supply and demand, so it is a common trading method in oil futures trading. It is said that. However, it is said that when the number of participants in the market decreases due to the increase in the number of large- scale traders, the price may fluctuate in the short term .
Vega Capital London may have made a big profit by trading in advance among traders and taking advantage of such peculiarity of crude oil futures trading, according to the person who informed Bloomberg is.
``We are currently investigating whether Vega Capital London has violated trading rules and caused a sharp fall in crude oil prices,'' said the U.S. Commodity Futures Trading Commission and regulators, particularly NYMEX. '.
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