Amid unprecedented oil prices in recent weeks, LiteForex announced this Monday that it has decided to change its liquidity provider for its oil contracts to ensure the best quality of quotes flow, the broker said.
In particular, the foreign exchange (forex) broker has changed its liquidity provider for contracts of UKBrent and USCrude crude oil blends. The company has done this at a time when the market is bracing for potential further negative oil prices.
“Due to that, the new symbols UKBrent_n and USCrude_n will be put into operation,” LiteForex said in its statement today. “The new contracts will be available for trading from May 18, 2020. On the same day, the symbols UKBrent and USCrude will be put into “close only” mode (which allows one only to close one’s trades involving the above-mentioned symbols).”
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Will oil prices go negative again?
As Finance Magnates previously analysed, May WTI futures contracts went into negative territory as the lockdown measures adopted by the coronavirus pandemic significantly reduced the demand for oil, resulting in much higher supply than demand.
With the settlement of the June WTI futures contract set for the 19th of May 2020, the situation has not improved – lockdown measures are still in place and the demand for oil is still much lower than normal, which has some brokers preparing for further negative prices.
So will history repeat itself? A previous analysis conducted by Finance Magnates shows that whilst no one has a crystal ball and we can’t tell for certain what will happen – there are still many risk factors in place that do make further negative oil prices a possibility. But on the flip side, oil is more supported now and lockdown measures are easing.
Regardless of whether oil prices will go negative again, around the settlement date, which is set for the 19th of May 2020, we are bound to see high levels of volatility, which will likely result in higher trading volumes for the commodity.