[arcticbull]

Commodities trading like this isn't really zero-sum like, for instance, options trading or equity futures trading. Oil producers who had a giant backlog of oil and nobody to sell it to (and full storage) were paying people to take it off their hands that month. Some enterprising folks were able to find some storage, hold on to the oil until the next expiration date, and were rewarded to playing a role in the market.

[hogFeast]

Er no. It is. The losers were Chinese banks/investors. Chinese banks created a ton of financial products linked to oil futures, they didn't know what they were doing and left it to the last minute to roll (afaik, none of the products in the US blew up).

[rsuelzer]

USO blew up. The held 25% of all the negatively priced contracts at close. The crux of this story is that investors piling into these ETFs created a massive sell side pressure at the close which this hedge fund found a way to arbitrage.

[anonu]

Just false. USO didn't "blow up". It's still very much trading and operated as expected.

Blaming retail investors is a very common trope of the financial markets recently. Truth is there just isn't that much retail fire power.

To your point: look at the USO roll schedule on the day the futures went negative you would have noticed that they were basically done 75 percent into the next month in the days before.

So we're now talking about a few 100 million USD exposure in the front month due to uso that needs to be rolled. That can't be the one to blame...

[hogFeast]

They didn't blow up. Blow up means lose all the money. Afaik, USO weren't trying to roll their whole book that day (the exchange put out a notice a month or so before telling people to roll...as the article says). The Chinese banks were literally attempting to roll the whole fund and investors lost 100% (afaik, they lost more than 100%...the sum I have seen is a loss of 200%+).