Since the beginning of the year, oil has experienced unprecedented volatility, which on futures contracts escalated to negative prices. Specifically, the May contract reached almost - 40 dollars, and with fast-filling storage capacities, the risk of negative prices still persists. This is a problem for CFD traders, as platforms like Metatrader and cTrader are not built for negative prices. Purple Trading has prepared special instruments CL+100 and BRENT+100, which is the spot price of oil increased by 100 dollars, where you can speculate on the return of oil to negative prices.
Negative oil prices have been a long time just a theory, and with the approaching expiration of the May contract, this theory has become a reality. No one was prepared for this event, not even the trading platforms. Neither Metatrader or cTrader can process negative prices on the underlying assets, and traders would find themselves in a situation where their trades on the CL or BRENT would be automatically closed at a price of $ 0.1 per barrel. At the same time, due to a very unstable situation and the possible return of negative prices, we had to set trading to close-only.
Chart: 1H chart of intruement CL.i (Zdroj: Metatrader 4 Purple Trading)
We can now get rid of these worries as we introduce two new instruments, the CL+100 and the BRENT+100. This is the spot price of oil, which you can see in the platform under the ticker CL and BRENT, now increased by $ 100. Not only you no longer have to worry about closing trades automatically, you can now speculate on return to negative prices.
Chart: 1H chart of instrument BRENT.i (Zdroj: Metatrader 4 Purple Trading)
The volatile situation on oil is likely to persist for several more weeks. Production capacity is approaching its limits, which the market should test over the next 3-4 weeks, which may be a turning point for the oil market. At the same time, the expiration of June contracts, which have already begun to be abandoned by large amounts by ETFs, is approaching, precisely because of the risk of a further decline to negative prices.
At first sight, the situation seems to be much more stable than 3 weeks ago, but this only reflects a fed positive news about the gradual easing of restrictions and the associated demand for fuel. Once there is no space to store for oil, the market will have a big problem and prices may fall to negative territory again.
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