On 20 April 2020, the price of a barrel of US oil fell below zero. The May West Texas Intermediate (WTI) futures contract was priced at -$37.63 a barrel in the US Energy Information Administration's (EIA) Contract 1 series. A futures contract is an agreement to buy oil for delivery on a set date. On the previous trading day, Friday 17 April, it was $18.27. The price fell $55.90 in one trading day.
A negative price means the holder of the contract paid someone else to take the position. The contract obliges its holder, at expiry, to deal in physical oil in Cushing, Oklahoma. Storage there was filling.
Why did oil prices go negative in April 2020? A negative oil price means a futures contract holder paid a counterparty to take the position. On 20 April 2020 the May WTI futures contract (EIA Contract 1 series) stood at -$37.63 a barrel, one trading day before it expired. Oil demand had collapsed, storage at the Cushing, Oklahoma delivery point was filling and expiry neared.
The June WTI futures contract (EIA Contract 2 series) stood at $20.43 the same day, $58.06 a barrel above the May contract.
No other day in the EIA's Contract 1 series, which tracks the futures contract with the earliest delivery date, shows a negative price. The series runs from 4 April 1983 to 5 April 2024.
Brent, another oil benchmark, had a June futures contract that closed at $19.33 on 21 April. It stayed positive, so the negative price was confined mainly to the May WTI contract and the Cushing spot price.
What is a futures contract?
WTI is a grade of US crude oil. A futures contract fixes the price today for a set amount of a commodity on a future date. Our guide to what a futures contract is has more.
The WTI contract is settled by delivery of physical oil at Cushing, Oklahoma. The EIA numbers contracts by delivery date. On 20 April 2020 the earliest was the May contract.
Most holders never take delivery. The EIA reports that only about 1% of futures traded go to physical delivery. Holders close out first, by selling the contract they bought.
What happened to oil prices on 20 April 2020?
The EIA reports that WTI front-month futures were priced in negative dollars for the first time since trading began in 1983. Front-month means the contract with the earliest delivery date. They trade on the New York Mercantile Exchange (NYMEX). At about 2:30pm Eastern time on 20 April, the contract traded as low as -$40.32 a barrel.
The daily figures are less extreme. In the EIA's futures series, the May contract stood at -$37.63 on 20 April. The EIA's separate spot series for WTI at Cushing stood at -$36.98. The spot price is the price for oil delivered now.
Chart 1 shows the Cushing spot price (EIA spot series) from 2 January to 30 June 2020. It stood at $61.17 on 2 January and $18.31 on 17 April, a fall of 70.1%.
Source: US Energy Information Administration
The line then drops to -$36.98 on 20 April and recovers to $39.27 by 30 June. No other day in the spot series, which runs from 2 January 1986 to 26 October 2026, is negative.
Why did the May contract fall below zero?
Three things happened together. Oil use fell. Storage filled. The May contract was about to expire.
The EIA says consumption of crude oil and petroleum products fell sharply after travel restrictions and the general economic slowdown during efforts to contain the coronavirus disease (COVID-19). US refineries processed 12.8 million barrels of crude oil a day in the week ending 17 April. That was 4.1 million barrels a day, or 24%, less than a year earlier.
Excess oil went into storage. Cushing has 76 million barrels of working storage capacity. As of 17 April, 58 million barrels were held in its tank farms, so storage was filling.
That left 18 million barrels of room on paper. The EIA adds that some of that room may already have been leased or committed.
The EIA says holders who had bought futures could not find anyone to sell their contracts to. Some sold at negative prices, in effect paying a counterparty to let them exit.
The EIA links this to the scarcity and high cost of storage at Cushing, which pushed holders to close their positions before delivery.
The EIA's table definitions page (opened 29 October 2026) sets the timing. Contract 1 is the contract with the earliest delivery date. Crude oil contracts expire on the third business day before the 25th calendar day of the month before delivery. If the 25th is not a business day, the count starts from the business day before it.
After a contract expires, Contract 1 moves to the next month. For May 2020 delivery, 25 April was a Saturday. The count starts from Friday 24 April and ends on Tuesday 21 April.
So Contract 1 was the May contract through 21 April. A holder on Monday 20 April had one trading day left to exit.
Source: US Energy Information Administration
Chart 2 shows the May and June futures contracts (EIA Contract 1 and Contract 2 series) from 1 to 21 April. The May line falls from $18.27 on 17 April to -$37.63 on 20 April. The June line moves from $25.03 to $20.43.
Why did the June contract stay positive?
The June contract has delivery a month later. Its price fell 18.4% from 17 to 20 April (EIA Contract 2 series), but stayed positive.
The gap between the two contracts shows the difference. Chart 3 plots how far the June futures price sat above the May futures price on each day from 13 to 21 April.
Source: US Energy Information Administration
On 17 April the gap was $6.76. On 20 April it was $58.06. The table gives the futures and spot figures for 17, 20 and 21 April.
Day | May futures (Contract 1) | June futures (Contract 2) | June minus May futures | Cushing spot |
|---|---|---|---|---|
Fri 17 April | $18.27 | $25.03 | $6.76 | $18.31 |
Mon 20 April | -$37.63 | $20.43 | $58.06 | -$36.98 |
Tue 21 April | $10.01 | $11.57 | $1.56 | $8.91 |
Dollars per barrel. Futures are the EIA's first and second NYMEX contract series. Spot is the EIA's Cushing WTI series. The May contract expired on 21 April. Source: US Energy Information Administration
The May futures price fell $55.90 on 20 April. The June futures price fell $4.60.
The EIA attributes the move mainly to the timing of the May contract's expiry against the fall in consumption. The June contract had another month to run.
Did anyone really get paid to take oil?
The EIA reports that the negative price was confined mainly to the financial market. Brent's June futures contract closed at $19.33 on 21 April. Longer-dated WTI futures contracts also stayed positive, as did spot prices for other, but not all, US crude oils.
Negative prices appeared in two EIA series that day: the May futures contract and the Cushing spot price.
On 21 April the May contract expired. The EIA's Contract 1 series shows it at $10.01, while the Cushing spot series shows $8.91. The spot price reached $19.72 on 1 May and $39.27 on 30 June 2020.
Can a futures holder lose more than the price?
A share bought outright cannot fall below zero, so its holder cannot lose more than the amount paid. A futures holder can.
Take one barrel of the May futures contract (EIA Contract 1 series). Its price was $18.27 on 17 April and -$37.63 on 20 April. A holder lost $55.90 a barrel. That is 3.06 times the $18.27 starting price.
What do the figures not show?
Every daily futures price here comes from the EIA's NYMEX futures series. The spot prices come from the EIA's Cushing spot series.
The EIA's article does not name who held the contracts. Our explainer on how the oil market works covers WTI, Brent and the people who trade them.
The May WTI futures contract fell to -$37.63 on 20 April 2020. Falling oil use, filling storage at Cushing and a near expiry left some holders paying to exit, while the June contract stood at $20.43.
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Common questions about negative oil prices
Can oil prices go negative?
Yes, a futures price can go negative. The May 2020 WTI futures contract did, standing at -$37.63 a barrel on 20 April 2020 in the EIA's Contract 1 series. The Cushing spot price, the price for oil delivered now, also stood at -$36.98. Brent's June futures contract closed at $19.33 on 21 April.
Why was the oil price negative on 20 April 2020?
The May WTI futures contract was one trading day from expiry. Oil demand had collapsed, while Cushing storage was filling, with 58 of 76 million barrels of working capacity held in tank farms. US refineries processed 24% less crude oil than a year earlier.
Do you get paid to take oil when the price is negative?
On 20 April 2020, yes, for holders of the May WTI futures contract. A holder of the May WTI contract could pay a counterparty to take it, according to the EIA. The EIA reports that Brent futures, longer-dated WTI futures and spot prices for other, but not all, US crude oils stayed positive.
What was the lowest WTI oil price on record?
The lowest daily value in the EIA's Contract 1 futures series is -$37.63 a barrel, on 20 April 2020 (series searched from 4 April 1983 to 5 April 2024). The EIA reports the contract traded as low as -$40.32 at about 2:30pm Eastern time that day. The Cushing spot series stood at -$36.98.
DISCLAIMER: This article is intended for educational purposes only. Any information or analysis in this note does not constitute an offer to sell or a solicitation of an offer to buy any securities. Nothing in this note is intended to be investment advice, nor should it be relied upon to make investment decisions. Any opinions, analyses, or probabilities expressed in this note are those of the author as of the note's date of publication and are subject to change without notice.
