A US regulator on Monday issued a report detailing events that led up to US crude futures' historic collapse into negative territory in April, but did not delve into the actions by individuals or firms that may have profited on the day.
Benchmark US crude futures plunged below zero for the first time in history in April as technical factors such as unusually high open interest coincided with fundamental factors including a shortage of storage options and an unprecedented collapse in demand due to the Covid-19 pandemic, the US Commodity Futures Trading Commission (CFTC) said in the report(external link).
Trading in the benchmark US contract has ripple effects across the global market and is used a key reference rate for pricing physical and financial oil transactions.
Open interest in the May contract was much higher than usual in the weeks prior to expiration and specifically at the start of the 20 April trading session, according to the report.
The previous 12-month average open interest in expiring West Texas Intermediate (WTI) contracts peaked around 430,000 contracts while open interest for the May contract peaked at 634,727 contracts on 2 April.
Open interest also continued to increase until about 10 days prior to expiry of the May contract even though it generally begins to decline around four weeks prior to expiry, the report said.
Still, a root cause analysis evaluating individual price movements was beyond the scope of the report, the CFTC said, adding that further data, information, and analysis may affect the observations.
Officials also declined to comment on reports of a probe into trading activities that led to negative prices.
"While some may have hoped for a more definitive analysis, we simply cannot provide that at this time — just as we cannot confirm or deny media reports of investigations tied to these events," said chairman Heath Tarbert.