If You Bought Oil Futures During 2020’s Market Crash, Here’s How Much You’d Have Today
Written by
John Csiszar
Edited by
Zuri Anderson
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The coronavirus pandemic of the early 2020s wreaked havoc across the globe. In addition to the unprecedented shutdown of businesses and daily life, the uncertainty of the pandemic absolutely roiled financial markets.
Oil futures, which are one of the most volatile asset classes of all, displayed extreme price movements in April 2020. If you had the foresight — and the emotional fortitude — to snatch up oil futures at that time, you could have earned a theoretically infinite return, at least mathematically.
In terms of real-world trading, no such thing as an “infinite return” exists; however, your actual gains could have been enormous. Here’s a look at the highly erratic trading pattern of oil futures in the 2020s, including reasons why it happened and what type of return you could have really earned.
2020s Market Crash in Oil Futures
Oil futures are contracts traded between investors that allow them to trade a specified number of barrels of oil at a specific price on a future date. A wide number of factors can affect the price of oil, from general supply and demand to geopolitical tensions, natural disasters, speculative activity, and more. This can make oil futures particularly volatile, as they are contracts to be settled at a future date.
Near the beginning of the coronavirus pandemic, in April 2020, oil futures absolutely plummeted. In addition to the collapse in worldwide demand for oil in general, speculators holding futures had a problem. If you actually hold an oil futures contract until expiration, you must take physical delivery of actual barrels of oil. While only a small percentage of oil futures contracts are settled with physical delivery, the fact remained that all of the now-excess oil in the world was taking up the bulk of available storage. This dramatically drove up the price of oil storage, making oil futures contracts even less desirable.
Combined with the uncertainty and outright panic regarding the pandemic, this storage problem helped to crater the price of oil futures. On Apr. 20, 2020, West Texas Intermediate (WTI) crude oil front-month futures traded as low as -$40.32 per barrel, according to the U.S. Energy Information Administration.
As hard as it is to believe, this means that at that time, investors were paying others $40.32 per barrel just for the privilege of unloading their futures contracts. As an investor, it means you could have been paid $40.32 per barrel to buy an oil futures contract.
Current Price of Oil Futures
As of 4:43 a.m. EST on Feb. 11, 2025, the March 2025 WTI crude futures contract was trading at $73.13, according to CNBC.
Theoretically, if you were able to buy WTI futures in April 2020 at -$40.32 per barrel and sell them for $73.13 in Feb. 2025, you would have earned $113.45 per barrel. However, you could not have held oil futures you bought in April 2020 until February 2025.
A more realistic examination of how much you could have earned would be to look at how much you could have sold that WTI contract you bought in April 2020 one month later, in May 2020.
By the second half of May 2020, the WTI futures contract was trading closer to $35 per barrel, according to the USEIA. If you received $40.32 per barrel to pick up that contract on Apr. 20, 2020, you could have made a tidy profit of $75 per barrel or so just one month later.
Risks and Rewards of Investing in Oil Futures
One of the primary reasons that speculators are drawn to the oil futures market is its volatility. This allows for a large potential profit in a short period of time, if a trader can guess the correct direction of the oil market.
However, as the experts at Charles Schwab point out, oil futures are leveraged products that can cost you more than your initial investment. In other words, not only can you lose all the money you put in, you might also be on the hook for even more.
This makes oil futures an appropriate investment only for the most aggressive traders and speculators. The volatile, short-term nature of oil futures means that they must be successfully traded into and out of on a regular basis in order to consistently make money, and that’s something beyond the capability of the average investor.
Although you could have theoretically made a fortune buying oil futures during their pandemic low, that analysis is more of an academic exercise than a real investment strategy.
Generally speaking, oil futures should be left to professional traders and speculators.
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