Synopsis: On April 20, 2020, oil prices fell below zero for the first time in history. Amid the chaos, nine traders from Essex leveraged TAS contracts and futures to make USD 660 million in just hours. Their trades showed how a few skilled traders could turn market chaos into massive profits and exposed weaknesses in the trading system.
On a day when oil prices unexpectedly fell below zero, nine traders in Essex managed to make USD 660 million in just a few hours. While the market was in chaos and many were losing money, this small group used the situation to their advantage.
Their trades that day became one of the most remarkable moments in oil trading history. This article is based on the Bloomberg feature titled “The Essex Boys: How Nine Traders Hit a Gusher with Negative Oil”
The Day Oil Broke the Rules
Among the many moments in 2020 that once felt impossible, few were as surreal as what happened on April 20. On that day, crude oil did something no one watching markets had ever seen before: it fell below zero.
West Texas Intermediate futures, the most widely used contract for trading oil, began the session at around USD 18 a barrel. That price was already low, reflecting weeks of economic stress, but the decline did not stop there. As the day progressed, selling intensified, and at 2:08 p.m. New York time, prices slipped into negative territory.
For the first time, sellers were effectively paying buyers to take oil off their hands. The collapse accelerated dramatically in the final minutes of trading. In a span of roughly 20 minutes, the market dropped by almost USD 40, settling near negative USD 38 a barrel.
It marked the lowest oil price recorded in the 138-year history of the New York Mercantile Exchange and, quite possibly, the lowest price since humans first began using oil for heat and light.
Traders, energy executives, freight operators, and regulators watched the chaos unfold in disbelief. Officials at the Commodity Futures Trading Commission stared at their screens as prices spiraled.
Tom Kloza of OPIS Ltd. later described the experience as surreal, comparing it to watching a Federico Fellini film, where events are visible but their logic is hard to grasp. Within 24 hours, oil was trading at positive prices again, tempting many to dismiss the episode as a brief anomaly. But the mechanics behind that day ran far deeper.
A Market Under Pressure: Pandemic, Oversupply, and Full Storage
At the heart of the collapse was a market already under extreme strain. The global pandemic had brought large parts of the world economy to a standstill. Travel slowed, factories shut down, and demand for oil dropped sharply.
Yet production did not stop overnight. By the end of March 2020, West Texas Intermediate futures were trading near USD 20 a barrel, the lowest level since after September 11. Earlier in the year, prices had hovered around USD 60, reflecting a far healthier global outlook.
Major oil-producing nations attempted to respond. After tense negotiations, producers led by Russia, Saudi Arabia, and the United States agreed to cut output by 10 percent. The reduction, however, proved insufficient. Oil continued to flood a market with shrinking demand. While all crude benchmarks were falling, WTI faced a unique problem tied to its delivery system.
Unlike Brent crude, which allows contracts to be settled in cash, WTI futures require physical delivery. Anyone holding an expiring contract must take possession of 1,000 barrels of oil in Cushing, Oklahoma, a landlocked hub often described as the “Pipeline Crossroads of the World.” As storage tanks in Cushing filled rapidly, the cost of storing oil threatened to exceed any profit from selling it. On April 3, NYMEX issued an unprecedented warning that prices could turn negative, signaling how severe the imbalance had become.
How Oil Futures Actually Work
WTI futures sit at the core of a roughly USD 3 trillion-a-year oil and gas industry. These contracts are agreements to buy or sell oil at a future date, and they play a major role in determining global oil prices, influencing everything from airline fuel costs to chemical manufacturing expenses. Beyond physical oil, billions of dollars in financial products are also linked to WTI prices in very specific ways.
A crucial feature of the market is the settlement price. For WTI, that price is determined at 2:30 p.m. four working days before the 25th of each month. For the May 2020 contract, that settlement fell on April 20. Normally, traders who do not want physical oil simply “roll” their positions, selling the expiring contract and buying the next month’s. This process usually works smoothly.
In early 2020, however, rolling became difficult. Falling prices attracted a wave of retail and institutional investors into oil-linked products, including a large Chinese fund called Crude Oil Treasure, which promoted itself with the slogan “Crude oil is cheaper than water.” As the settlement approached, billions of dollars’ worth of contracts needed to be rolled forward, but with storage nearly full and demand weak, willing buyers were scarce. Anyone left holding contracts risked being forced to take delivery of oil they had nowhere to store.
The Settlement Trap: TAS Trades and the Final 30 Minutes
The vulnerability of the market was most visible in a mechanism known as Trade at Settlement, or TAS. A TAS contract allows traders to agree to buy or sell oil at whatever price is printed at the settlement. Originally designed for long-term investment funds tracking oil prices, TAS contracts carried little immediate price impact when accumulated.
The risk emerged when traders combined TAS positions with aggressive activity in regular futures. A trader expecting prices to fall could buy oil via TAS while simultaneously selling futures throughout the session. As settlement approached, accelerating those sales could push prices lower, increasing profits on the TAS side. This strategy was legal as long as traders were not deliberately attempting to force prices to artificial levels.
On April 20, this dynamic intensified. Heavy selling began roughly two hours before settlement. As prices fell from USD 10 to USD 5 and then toward zero, fear spread through the market. At 2:08 p.m., WTI slipped into negative territory. NYMEX calculates the final settlement using a weighted average of trades between 2:28 p.m. and 2:30 p.m. The final print for May WTI came in at negative USD 37.63.
The Essex Traders: From Pit Trading to the Biggest Day in Oil History
As regulators later discovered, the traders who appeared to have the greatest impact on prices that afternoon were not global banks or oil majors, but a small group operating from homes in Essex, northeast of London. The nine independent traders were affiliated with Vega Capital London Ltd. Together, they would go on to make roughly USD 660 million in just a few hours.
The group was centered around Paul Commins, a former pit trader from London’s International Petroleum Exchange. Known by the nickname “Cuddles,” Commins had built his career in the chaotic, physical trading pits that opened in 1980 and once housed around 400 shouting traders in colorful jackets. He later became a “local,” trading his own money, and was described by former colleagues as one of the top performers in his pit.
When electronic trading shut the pits in 2005, Commins and others adapted. Over time, he assembled a loose collective of traders, including seasoned veterans and younger recruits in their 20s. Among them were Chris Roase, known as Dog; Elliot Pickering; Aristos Demetriou; and Connor Younger. Though each traded independently, records and accounts suggest they often traded in the same direction at key moments. Socially, they were close-knit, sharing leisure time, holidays, and even neighborhoods.
USD 660 Million in Hours: The Trade That Shocked Regulators
On April 20, while Britain was in lockdown, several of the Essex traders logged on before sunrise. Central to their strategy were TAS contracts. As large funds like Crude Oil Treasure sold TAS positions, the Essex group bought them, committing to purchase oil at the eventual settlement price. From the market’s open late on April 19 to noon in New York the next day, WTI fell from about USD 18 to USD 10.
As prices declined, the traders sold regular futures and calendar spreads, benefiting from continued weakness. In the final hours, trading volumes surged, pushing prices through zero. Over the last 22 minutes, selling pressure intensified, and the contract collapsed further. In the final half-hour, the nine traders were, as a group, the largest sellers of WTI futures and spreads, an unusual dominance in a market typically led by firms like BP, Glencore, and JPMorgan Chase.
The result was staggering. Demetriou, Pickering, and Younger each earned more than USD 100 million. Roase made around USD 90 million. Commins earned roughly USD 30 million, while even his son George made about USD 8 million. Across the globe, others suffered heavy losses. China’s fund was wiped out. A trader in Canada ended up owing USD 9 million. Interactive Brokers lost USD 104 million after its systems failed to handle negative prices.
Smart Trading or Market Manipulation? The Fallout and the Lessons
The scale of the profits ensured regulatory scrutiny. Investigators examined whether the traders acted independently or coordinated to push prices down. Vega’s lawyers denied wrongdoing, arguing their clients responded to clear market signals, including NYMEX’s warnings that prices could turn negative. No authority has accused the traders of illegal activity.
The episode has exposed weaknesses in the TAS mechanism. Academic research has highlighted how traders can build large TAS positions with minimal price impact, then influence settlement through regular trading. The CFTC has since debated whether reforms are needed. An interim report focused on macroeconomic causes drew criticism for not addressing potential manipulation.
Whatever the final conclusions, April 20, 2020 remains one of the most extraordinary days in commodity market history. It revealed how fragile market structures can become under stress, and how a small group of traders, operating at the right moment, can shape outcomes measured not in millions, but hundreds of millions of dollars.
Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on tradebrains.in are their own, and not that of the website or its management. Investing in equities poses a risk of financial losses. Investors must therefore exercise due caution while investing or trading in stocks. Trade Brains Technologies Private Limited or the author are not liable for any losses caused as a result of the decision based on this article. Please consult your investment advisor before investing.
