This week saw reader interest spike between 1,000 to 10,000% for many of our oil investing and trading articles, as readers sought to understand why futures for the May contract went negative for the first time in history, and some looked for ways to trade on the volatility.
Many of our readers were trying to get an understanding of what was happening to WTI -West Texas Intermediate oil, the U.S benchmark, while others sought risky ways to profit on the swings through ETFs, options and penny stocks.
Here are some of the top searched articles that brought readers to Investopedia during the week:
In a classic example of readers turning to us to find out what was going on, they came to this article to find out. It was the May 2020 contract for West Texas Intermediate (WTI), the U.S. benchmark, that fell below zero for the first time in history as buyers had no place to store the oil they bought and demand disappeared. Brent crude oil prices also fell precipitously this week as demand is falling in Europe, as well.
It’s not as beautiful as an Argentinian dance, especially when present and future prices of commodities veer in opposite directions, but that’s exactly what happened this week with near-term oil contracts as well as those set to expire six months from now.
After readers figured out what was happening, many set out to take action. Risky business was the name of game for many of our readers who were trying to take advantage of the raging volatility in oil markets this week. With the May contract trading below zero, some traders anticipated higher moves for oil, and they looked to capitalize on those through the options market.
Some readers think oil has further to fall, and went in search of inverse ETFs to make that bet. Depending on their timing, they either did very well—or very poorly—as prices rebounded 50% off their lows earlier in the week.
Oil investors with exposure to the ETF USO United States Oil Fund learned what happens when one of the monthly contracts for oil futures falls below zero. Trading in USO was halted as prices collapsed, triggering a mild panic among its holders. Its issuer, USCF, was forced to make a one for eight reverse stock split to stabilize prices.