WTI crude oil price drop effect: MCX settles April crude oil contract in negative
Considering that 11,000 oil futures contracts remained opened on Indian commodity exchange at the end of the day, the loss for all long positions have been pegged around Rs 418 crore
- Apr 21, 2020,
- Updated Apr 21, 2020 11:51 PM IST
In wake of record slump in the West Texas intermediate (WTI) contract price for May, Multi Commodity Exchange Clearing Corporation (MCXCCL), a wholly owned subsidiary of the Multi Commodity Exchange (MCX) of India, settled April expiry at a negative Rs 2,884 per barrel, in an unprecedented move which was never seen in India's commodity derivatives history.
As a result, many retail traders with long positions in the April 2020 contract would now have to pay around Rs 1 lakh for every lot of crude, i.e. 100 barrels, at the MCX quoted closing price of Rs 965 on April 20, as per Moneycontrol report. This was calculated assuming the trader would have paid the full value of the contract.
Considering that 11,000 oil futures contracts remained opened on Indian commodity exchange at the end of the day, the loss for all long positions have been pegged around Rs 418 crore, the report said.
In a circular issued on Tuesday, MCXCCL said crude oil futures contracts expired on April 20 need to be settled at, while taking into account the price of the front month contract, i.e. May 2020 in this case, which was trading at a negative $37.63 per barrel (or negative Rs 2884 per barrel) around 11 pm.
"The crude oil futures contracts expired on April 20, 2020 are also being settled on New York Mercantile Exchange WTI crude oil front month contract's settlement price (i.e. -$37.63) converted into Indian rupees (RBI USD-INR reference rate: 76.6335) and rounded off to the nearest tick," MCXCCL said in a statement.
In wake of record slump in the West Texas intermediate (WTI) contract price for May, Multi Commodity Exchange Clearing Corporation (MCXCCL), a wholly owned subsidiary of the Multi Commodity Exchange (MCX) of India, settled April expiry at a negative Rs 2,884 per barrel, in an unprecedented move which was never seen in India's commodity derivatives history.
As a result, many retail traders with long positions in the April 2020 contract would now have to pay around Rs 1 lakh for every lot of crude, i.e. 100 barrels, at the MCX quoted closing price of Rs 965 on April 20, as per Moneycontrol report. This was calculated assuming the trader would have paid the full value of the contract.
Considering that 11,000 oil futures contracts remained opened on Indian commodity exchange at the end of the day, the loss for all long positions have been pegged around Rs 418 crore, the report said.
In a circular issued on Tuesday, MCXCCL said crude oil futures contracts expired on April 20 need to be settled at, while taking into account the price of the front month contract, i.e. May 2020 in this case, which was trading at a negative $37.63 per barrel (or negative Rs 2884 per barrel) around 11 pm.
"The crude oil futures contracts expired on April 20, 2020 are also being settled on New York Mercantile Exchange WTI crude oil front month contract's settlement price (i.e. -$37.63) converted into Indian rupees (RBI USD-INR reference rate: 76.6335) and rounded off to the nearest tick," MCXCCL said in a statement.