Oil futures go negative
On April 20, 2020, the May 2020 contract for West Texas Intermediate crude oil settled at minus $37.63 per barrel — the first time any oil futures contract had ever printed a negative price. COVID-19 lockdowns had collapsed gasoline demand by roughly 30 percent globally; storage at Cushing, Oklahoma was filling up; holders of expiring May contracts had to either take physical delivery (with no place to put the oil) or pay someone to take the contract off their hands. The negative print lasted only a few hours but stranded retail investors in oil ETFs with billions in losses and forced a major restructuring of how oil futures are stored, financed, and physically settled. It also marked the moment energy markets fully demonstrated their financial fragility.
The Bank of China's 'Yuan You Bao' product, a retail oil-futures wrapper marketed to Chinese savers as a 'safe' commodity investment, lost roughly $1.4 billion of customer money on April 20 because its rebalancing was scheduled exactly during the negative-price episode. Class-action litigation followed; the product was withdrawn. The episode taught a generation of retail investors that 'commodity exposure' through financial wrappers is not what most people think it is.
05 · The Transition
Three energy revolutions are running simultaneously. American shale fracking has made the U.S. the world's largest oil and gas producer for the first time since 1973. Solar and battery costs have collapsed by 80 to 90 percent in fifteen years, with China dominating both production and the rare-earth supply chain. And weaponized energy — Russia's gas cuts to Europe, Western sanctions on Russian oil, the price-cap mechanism, the Nord Stream sabotage — has demonstrated that the petrodollar system can be unwound, in pieces, in months. The wealth ranking of the next era is being decided right now, and not all of the candidates know they're competing.
Read the full era →- 2008 — 2014U.S. shale oil revolution
- Nov 27, 2014Saudi price war against shale
- 2010 — 2024Solar electricity becomes the cheapest power
- 2017 — presentCobalt and lithium become geopolitical
- Sep 26, 2022Nord Stream pipelines sabotaged
- Dec 5, 2022First fusion ignition at NIF
- Aug 16, 2022Inflation Reduction Act passed