How much did investors earn from the negative oil price?
On April 20, the exchange value of futures for May delivery of WTI crude oil turned out to be negative and reached almost -$38. The manager of one of the large investment companies said that on that day his clients called him and asked to buy futures. At that moment he didn’t aim at making money from the oil collapse.
On April 20, the Moscow Exchange limited futures trading to $8.84 per barrel. From the moment when the cost was below this mark, traders couldn’t do anything, since the system didn’t accept incoming orders. The next day, the Moscow Exchange stopped trading for half of a day, arguing that the systems were not ready to work with negative rates. At the same time, representatives of the exchange said that the supplies will be made at the closing price on the New York Stock Exchange, where the cost reached -$37.63. It is not known how much the investors, who expected the price jump, lost that day. According to preliminary estimates of the Alor Broker company, the amount reached $1 billion. It is also known that some investors plan to sue the Moscow Exchange for stopping trading. However, there were those who were able to capitalize on the record drop in trading.
One of them was Vladimir Tsuprov, head of TKB Investment Partners. His profit was about 95%. According to him, he went short through the ETF after the market reacted to Donald Trump’s Twitter message that Saudi Arabia and Russia had come to an agreement. The expert was sure that the parties would spin out time, but later he realized that this was true — by that time he suffered losses. Tsuprov analyzed the market and found out that even if agreements were reached, there would be no sharp growth, since OPEC+ is unlikely to be able to reduce production to the required level. Therefore, Vladimir didn’t fix the loss, but kept the position.
By April 14, he had already benefited and decided to continue to hold the position, as he saw the excitement around the ETF of the US Oil Fund. Tsuprov was sure that the difference between the April and May futures would play a low-down trick on investors. On April 20, he already learned from the network that the price of futures went into the red.
He decided to sell half of the position and leave the other half, since by that time he had managed to earn twice as much. At the moment, Tsuprov doesn’t yet know when he will close the deal, since in May remains an open question.