Online Lezing door Timo Lange

29 mei

Negative yields observed to be as contagious as WuFlu: Oil prices turn negative!

History was made on the 20th of April 2020, when the price of May 2020 WTI oil futures dropped over 54$ in one day, closing at a record low price of -37.63$ per barrel. In a world awash with negative interest rate bearing debt, the “negative yield virus” of the financial markets has thus spread to its cousin, the commodity markets.

How is it possible that the price of oil went this negative? And, why do we not buy these oil contracts en masse and wait for the economy to settle again?

During this online seminar, Timo Lange will first discuss the crucial theoretical pillars and related characteristics of the financialized commodity markets which made this sudden drop in oil prices possible. Thereafter, attention will be given to several consequences for participants in the broader oil industry, counterparties and the economy at large. The seminar will continue by discussing stories of hardship of numerous uninformed bagholders who lost their life savings in this sudden collapse of oil prices and, crucially, conclude with lessons drawn from the bagholders’ mistakes.

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