A London-based trading house bought 250,000 barrels of oil during the historic plunge below $0 and likely made a fortune Saloni Sardana May. 14, 2020, 12:27 PM Reuters BB Energy, an oil trading house based in London, bought 250,0000 barrels of oil when US prices turned negative on April 20, raking in a huge profit, Bloomberg reported on Thursday. BB Energy was one of the few trading houses that had storage capacity when other traders were scrambling for options, allowing it to buy up the historically cheap oil, a source told Bloomberg. The Commodity Futures Trading Commission said on Wednesday that West Texas Intermediate crude for delivery in June could also turn negative upon the contract's expiry. Track the price of oil live on Markets Insider. One trader bought 250,000 barrels of oil and secured a rare payout as oil prices turned negative last month, causing jitters in markets and leaving most other traders scrambling to find storage options across both sides of the Atlantic, Bloomberg reported on Thursday. But for BB Energy, a trading house based in London, the historic oil-market crash was a golden opportunity because it had storage capacity when other firms didn't, a source told Bloomberg. BB Energy bought about 10% of all barrels of West Texas Intermediate crude futures for delivery in May. US oil prices hit an all-time low of negative $37.63 on April 20 because of an extreme shortage of storage options for oil, meaning many traders had to effectively pay others to take the oil off their hands. It was unclear whether BB Energy was still holding on to the barrels it bought or how much the trading house paid (or, indeed, was paid), Bloomberg said. Read more: Buy these 13 tech stocks that are abnormally disconnected from Wall Street's expectations for profit growth and poised to rocket higher, Credit Suisse says BB Energy says it trades 20 million metric tons of crude and petroleum products annually. A lack of storage options, particularly at a key facility in Cushing, Oklahoma, and a reduction in demand for the commodity contributed to WTI's historic price crash. Oil has been ravaged by the coronavirus pandemic, which has all but shut down international travel and greatly reduced manufacturing output, torpedoing demand. Concerns are mounting that the June WTI contract could follow the same pattern as the May contract, with demand for storage outweighing supply at the expiry of the contract, pushing oil below zero again. The Commodity Futures Trading Commission, the US commodities regulator, issued a rare advisory on Wednesday urging market participants to prepare for a repeat scenario of negative prices for the June WTI contract. Read more: A 20-year hedge fund vet shares the 3-part checklist that guides every investment decision he makes — and breaks down a stock pick he thinks could increase 50 to 100 times in his lifetime "We note that we are issuing this advisory in the wake of unusually high volatility and negative pricing experienced in the May 2020 West Texas Intermediate (WTI), Light Sweet Crude Oil Futures contract on April 20 (the penultimate day of trading and expiration of the contract)," it said. On Wednesday, OPEC downgraded its demand forecast by a third, saying it expects demand to fall by just over 9 million barrels per day in 2020. OPEC had previously forecast a slump of 6.84 million barrels per day. WTI crude was trading at about $26.62, up 4.3%, on Thursday morning. Brent crude, the international benchmark, was at $30.36 a barrel, up 2.9%, as of 6:20 a.m. ET.
Really. So the June WTI contract, which has been rising up and up and up since the negatory nonsense of May, is now going to plummet from a price of $26 now, to negative by next Tuesday/Wednesday? Well, if it does, I guess we'll all be buying the July contract then.
250,000 barrels @ $37.63 a barrel, for a big London trading house is not really a fortune. It is a drop in the bucket. They traded 140 million barrels a year!
I think they full Of shit its funny how they always warn after the fact i think the stench has been taking out of everyone that thought it be easy money right now it is easy money except Most brokers wont let u trade it i had the june contracts at the teens and they liquidated me along with everyone else fuck it I guess the lesson is this is a much much bugger game than anticipated
$10/barrel but not .01/barrel. there was very little volume when it was trading a -$37/barrel in the physical world nobody sold oil for less than $10/barrel which what the price oil settled. for the contract that traded -$37/barrel and it oil triples in a month? And they are not obligated to report their profits to the fake news channel. If they did made a profit ,they would keep quiet.
Stop believing the cushing full story... The drop to low was only very temporary and right when QM and ICE futures cash settled.... at low. I would not be surprised at all if big shorts in QM and ICE Fut sold down (aka manipulated) CL only to cover right afterwards... Only very little volume made the job. Banking huge profits in the cash settled futures and a minor loss on CL. I hope (and heard) that CME and ICE are investigating, i think the bank of china pushes them to do this.
Profit is the result of volume * profitmargin. Probably the deal of 250,000 barrels had 100 times or more profits per barrel than the usual trading. So the profits can be equal to 25 million barrels in normal trading. Never calculate only based on volume, profitmargin can have more importance than volume.