Oil traders picking over the bones of last week’s plunge into negative prices for WTI have highlighted one area of interest - record volumes of “trading at settlement” contracts were executed that day, largely, they say, before prices went below zero #OOTT 
Volumes of so-called TAS contracts were more than four times higher that Monday than on any day in 2019, and would be consistent with a large, not-particularly-sophisticated ETF or other oil-linked product looking to close out its position. #OOTT
ft.com/content/857515…
ft.com/content/857515…
It’s not entirely clear who exactly was behind the TAS WTI contracts. But people in the industry say traders could see the volumes, if not the participants behind them. #OOTT
In theory that means some traders were aware there would be a big position that had to close out at whatever the settlement price was going to be, plus or minus a few pips. Hard to say with certainty if that contributed to others willingness to let prices keep falling... #OOTT
... but it’s an area some traders are looking at with interest and wondering if there will be a repeat this month. #OOTT
To be clear the fundamental reason for the WTI plunge still seems to be the obvious one - lack of storage availability at Cushing in May, which caught a number of traders out in that last madcap scramble before settlement got underway, the day before expiry. #OOTT
But the sheer size of the TAS volumes have caught people’s attention.
Bank of China’s ‘oil treasure’ product, which reportedly (h/t Caixin) lost as much as $1.4bn that day, has attracted criticism for rolling from the May to June contract so close to expiry. #OOTT
Bank of China’s ‘oil treasure’ product, which reportedly (h/t Caixin) lost as much as $1.4bn that day, has attracted criticism for rolling from the May to June contract so close to expiry. #OOTT
The bank’s first response last Tuesday was to query the settlement price of -$37 and change. It’s not entirely clear why given it was on the front page of newspapers around the world. But they have since said that’s roughly where’s their May WTI contracts got closed out at. #OOTT
The bank hasn’t commented specifically on TAS contracts to best of my knowledge. #OOTT
But if you’re ever having a bad day’s trading, spare a thought for the participants in WTI that day - whoever they might be - that executed a TAS contract when crude was still roughly around $10/bbl only to find it finally settled at -$37 #OOTT
