Oil War about 3 weeks to go before a move up, page-51

So the futures price for WTI oil within the last few hours was negative by as much as minus $36 a barrel. I raised the possibility of negative priced oil on the Otto HC site on 23 March when discussing whether Otto will survive.

The negative price is a function of how oil futures work. Within the next 24 hours anyone holding a buy oil May futures contract will get a phone call and be asked about where they want the oil under that contract delivered. Speculators as opposed to say, refiners, do not generally have storage space so they typically sell the contract before expiry. This time when they tried to sell there were no buyers until the oil price went strongly negative, costing such speculators dearly.

In 24 hours the new June contract will come into play which currently has WTI at around $20 a barrel (right now anyway).

So is there any problem?

Well the fact that virtually no one had the storage space to buy the oil contract is of concern. While storage space remains to be filled it appears almost all of it has already been contracted out. This raises the issue of what will happen to the oil Byron produces under its futures contract in the next few months. Is the storage space available? If not, what is the result?

Additionally some entities that trade futures have taken an enormous loss overnight. Is one of these entities the counterparty(s) to the Byron futures contract? If so, what is the expected result?

I do not know the answer to these questions, maybe Byron does not know either. However, if they do have some knowledge about these issues I suggest the continuous disclosure rules would mean such knowledge should be conveyed to the market. After all, it is Byron's oil futures hedge which right now is keeping Byron's revenue afloat.