It was the oil exchange traded funds (ETFs) who trade the oil contract that suddenly found themselves trapped between owning oil contracts and not being able to

It was the oil exchange traded funds (ETFs) who trade the oil contract that suddenly found themselves trapped between owning oil contracts and not being able to offload them in time for delivery. Commodity prices are based on the delivery of the physical goods for a given month. If you don't get rid of the contract by the date stipulated in the contract, you are contractually obligated to take delivery. If you're a financial institution setup to buy contracts from producers and sell contracts to refineries, you probably don't have any infrastructure to take delivery and safely store crude (which is highly toxic stuff). This is partly why prices went negative. Too many contracts were held by institutions who could not deal with delivery. IMHO I believe there are other reasons behind negative oil prices: * Co-ordinated central bank action since 2008 that has led to 'ZIRP'--zero interest rate policy. * ZIRP leads to the misallocation of capital (US shale may not have happened if interest rates were higher) * The Petrodollar System (oil is denominated in USD) * The Eurodollar System (non-US banks make USD denominated loans to non-US firms) * Geo-politics of the US reserve currency status which is being challenged by Russia (Russia doesn't like the foreign policy constraints that come with the USD being the world's reserve currency) * Geo-politics of the Saudis not liking US oil production (the Saudi influence on US geopolitics has waned since the US has become the largest oil producer) * The 'milkshake dollar theory' (the USD will gain relative to other currencies and that will cause systemic domestic and global economic problems). The obvious thing is to blame it all on the COVID-19 demand shock, but I think it's really a multivariate problem. The global economic outlook and geopolitics were shaky prior to the pandemic.