A US regulator warned that oil traders should prepare for negative prices again as soon as next week

• The US commodities regulator, the CFTC, warned in a notice on Wednesday that participants should brace for negative oil prices again when the June WTI contract expires.
• The WTI contract for June is due to expire next Tuesday prompting fears of negative prices again.
• Oil went negative for the first time in April when the May futures contract expired, meaning that anyone holding contracts would have to take physical delivery of their oil.
• With storage limited due to tumbling global oil demand, prices fell below zero as traders chose to lose money on oil rather than scramble to find storage space.
• Track the price of West Texas Intermediate live on Markets Insider.

The US commodities regulator is urging market participants to be prepared for another negative oil price crash when the US oil contract for June expires later this month.

In a notice Wednesday, the Commodity Futures Trading Commission (CFTC) urged participants to "maintain rules to provide for the exercise of emergency authority, as is necessary and appropriate, including the authority to liquidate or transfer open positions in any contract; to suspend or curtail trading in any contract."

"We are issuing this advisory in the wake of unusually high volatility and negative pricing experienced in the May 2020 physically-delivered WTI contract, and related reference contracts, on April 20," CFTC added.

But CFTC stressed that the notice applies equally to trading in other commodities.

US oil prices turned negative for the first time in history on April 20 when the May futures contract expired, meaning that traders holding contracts would have to take physical delivery of their oil.

On the day the contract expired, WTI traded as low as -$37 per barrel.

At the same time, Brent crude, the international benchmark fell to a more than two-decade low.

Lack of storage options, particularly at a key storage facility in Cushing, Oklahoma, and the reduction in demand for the commodity during the ongoing coronavirus pandemic, both contributed to WTI 's historic price crash. With a lack of storage available, traders took a financial loss to sell their oil, rather than find storage space for it.

Coronavirus has battered the demand for oil due to a shut down international travel, and greatly reduced manufacturing output, in turn torpedoing demand for oil.

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Negative oil prices caused major jitters worldwide, and inflicted substantial losses on many traders.

Trading platform Interactive Brokers, for instance, said the crash cost it $104 million after it compensated investors for a trading glitch which meant some traders couldn't see negative prices during last month's historical plunge in oil.

Thomas Peterffy, the founder and chairman of Interactive Brokers, told Bloomberg that oil turning negative revealed bugs in the company's software and that it would refund any customers who were locked in long positions when the price was actually below zero.

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