WHAT HAPPENED TO OIL
John Lynch Chief Investment Strategist, LPL Financial | Jeffrey Buchbinder, CFA Equity Strategist, LPL Financial
Negative oil prices have dominated headlines recently. A combination of oversupply, lack of demand, and a lack of storage capacity resulted in temporarily negative oil prices, where holders of a futures contract were paying others to take delivery of oil for them. We explore what happened, what it means for the world market, and where oil prices could ultimately be headed.
WHAT NEGATIVE OIL PRICES MEAN
Unlike stocks, which are inherently a financial instrument, the world of commodities trading intersects with real world supply and demand of goods. Futures contracts, utilized across a range of commodities from lean hogs to concentrated orange juice, represent an agreement to deliver a set amount of...