Why does Oil Price Go Negative in the Market? - Part 2

You may read previous post (Part 1):

- Why does Oil Price Go Negative in the Market? - Part 1 | Tanza Erlambang Update

Fig 01- One of gasoline stations at neighborhood

However, NYMEX was opened in 1872 for commodities trade only, the stocks included:

- copper

- platinum

- gold

- silver

The negative price happened when sellers can not find the buyers for future contract, usually near term contract.

Fig 02- Early morning, illustration only

The oil future price should be higher than today price (the spot price). In fact, the price is often higher in the short and long terms.

Fig 03- A Pom Pom flower, illustration

Near term contract refer to price contract in days, weeks or a month, not in years (long term).

It is a sign of bad economy in which negative price “could be” meaning there is no demands, thus less industry activities (productions).

Then, lead to unemployment, and then hurt economic. On and on.

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