Today’s Oil price collapse of expiring May 2020 contract is completely unprecedented. The depth of negative price reflects lack of buyers, which means no real price. Puzzle to watch is relative resilience of June contract, which currently remains over $20. Also Brent

What can change in next 30 days before June expiry? Demand unlikely to increase much, despite moves to slowly reopen, Storage (future demand) already looks pretty full, though maybe not quite as topped out as today’s price action implies. Supply is not falling quickly enough.

While its possibly transport issues couldn’t be resolved in the scramble, broader storage challenge remains. Who can add storage and where? More floating storage? More SPR buying for key importing countries such as China and India? What about commercial storage?

Will this encourage more curtailment in jurisdictions like Alberta, or prompt a decision from Texas and other oil regulators in US? Or as seems more likely, maintain the burden of adjustment on companies (and those, especially in PE, that hold their debt)? Credit disruptive.

While negative or super low price for oil may not be realistic, even the relatively more upbeat price curve for rest of the year still implies a lot of pain for oil producers, and assets that correlate including select sovereign debt and FX.

Broader question is how much this is bad timing (contract expiry) testing storage capacity and not enough time for creative measures or another canary in coal mine. The fundamentals still don’t look great, though production cuts likely to increase.

there seems scope for some oil linked assets to catch partway down, and more credit market strain. This is likely despite the fact that there will seem to be a big rally. Watch June and July contracts, and whether this instability migrates to what has been more stable Brent.