How oil went to minus $40 while traders were left with a hole from a bagel: the chronicle of the great COVID scam.
Spring 2020. The world was hit by a pandemic, the streets emptied, planes landed, and oil… Oh, oil made such a somersault that even the most seasoned traders grabbed their heads, and then their wallets. The price of American oil WTI in April 2020 didn’t just fall — it went negative. Yes, down to minus $40 per barrel! That’s when you not only don’t get paid for oil, but you’re also asked to pay extra to have it taken away. And while the world watched this with mouths agape, some overconfident traders, thinking themselves the wolves of Wall Street, fell into a trap they had set for themselves. Sarcasm? Oh, there will be plenty of it. Let’s go.
Act One: “No one was waiting, but everyone knew”
COVID rolled across the planet like a tank across cardboard scenery. Factories shut down, cars parked, and demand for oil collapsed as if someone had turned off the lights in the global economy. Storage was bursting at the seams; there was nowhere to put the oil. But traders, those geniuses of financial chess, continued to play their favorite game: “Buy cheap, sell high.” They watched as oil prices fell — from $60 per barrel to $20, then to $10. And what? “This is the bottom!” they shouted, rubbing their hands and buying WTI futures as if they were tickets to a Beyoncé concert.
Oh, how wrong they were. On April 20, 2020, May futures for WTI didn’t just fall to zero — they went into negative territory. Minus $40! It’s as if you went to a store, and instead of getting change, they said: “Pay us $40 so we can take your goods.” Why did this happen? It’s simple: no one wanted to take physical oil. Storage in Cushing, Oklahoma, was packed to the brim. Traders holding futures faced real delivery of barrels, and there was nowhere to put them. So they had to pay extra to get rid of the contracts. Brilliant, right?
Act Two: “Traders Against Reality”
Now imagine: there sits a trader, coffee in one hand, smartphone with a trading terminal in the other. He’s already figured out how he’ll buy a yacht after oil “rebounds”. After all, it always rebounds, right? The market can’t just go crazy! But the market, as it turned out, can. And it certainly did.
When prices went negative, panic ensued. Traders who bought futures at $18, expecting a rise, suddenly realized that their assets had not just depreciated — they had become a debt pit. Some tried to close their positions, but it was too late: there were no buyers, and the exchanges, including the Moscow Exchange, began to halt trading or fix prices at levels that still left traders in the red. For example, trading on WTI futures on the Moscow Exchange was halted at $8.84, and then losses were calculated at minus $37.63. The result? Hundreds of traders owed brokers millions. One guy, reportedly, bought contracts for 1.5 million rubles and then found himself owing the broker several times more. Bravo, maestro!
And this is where the funniest (or saddest, depending on your perspective) part begins. Traders started shouting: “We were deceived! The exchange is to blame! It’s a conspiracy!” Oh, of course, a conspiracy. Oil doesn’t just go negative on its own; it’s the work of the global backstage that decided to rob honest speculators. No one, of course, remembered that they themselves were jumping into the market, ignoring the obvious: demand for oil had died, and there was nowhere to store it. But why think about such trivialities when you can just “catch the bottom”?
Act Three: “Bitter Truth for the Overconfident”
You know what’s the most ironic? While some traders were lamenting their losses, others — those who sensed trouble in time — made millions. Yes, there were such people. Small groups of traders who sold futures in time or even bought them at negative prices struck it rich. They didn’t try to outsmart the market; they just read the news and understood that the world had changed. But there were few of them. Most, blinded by greed and faith in the “eternal rebound,” got caught in the meat grinder.
And here’s the bitter truth for you, gentlemen traders: the market is not your friend. It is not obliged to accommodate your dreams of a yacht and a villa in the Maldives. Did you think that COVID was just a temporary glitch and that oil would soon return to $60? Well, congratulations, you lost. The market showed you who’s in charge here, and it’s definitely not you with your “technical analysis” and “sense of the bottom.” And the exchanges? They were just doing their job: fixing prices, halting trading to prevent chaos from getting worse. No one tricked you — you tricked yourselves by believing that you could outsmart reality.
Epilogue: “Lessons that No One Will Learn”
In the end, oil, of course, rebounded later. By the summer of 2020, June futures were trading above $20, and by 2021 prices had returned to decent levels. But for those who got caught under the roller in April, it was little consolation. Some lost their savings, some lost faith in trading, and some are still writing angry posts in Telegram channels, blaming everyone but themselves.
So, dear traders, the next time you decide to “catch the bottom,” remember April 2020. Remember how oil went negative, and your dreams of wealth sank even deeper. And maybe instead of jumping into the market shouting “I’m a genius!”, you’ll just pour yourself a cup of coffee and think: am I being too overconfident? But knowing you, you’ll still jump in. And the market will kiss you again. Just not on the forehead, but somewhere lower on the back.
