Negative oil prices have dominated headlines recently. A combination of oversupply, lack of demand, and a lack of storage capacity resulted in temporarily negative oil prices, where holders of a futures contract were paying others to take delivery of oil for them. We explore what happened, what it means for the world market, and where oil prices could ultimately be headed.

What Negative Oil Prices Mean

Unlike stocks, which are inherently a financial instrument, the world of commodities trading intersects with real world supply and demand of goods. Futures contracts, utilized across a range of commodities from lean hogs to co

Oil had a wild week last week, even turning negative on Monday, April 20, as worries about lower demand in a sharp recession and where to store the actual barrels of oil sparked a historic rout.

“The reality is oil isn’t worthless, but at these levels it’s a mixed bag. For consumers, lower oil means lower gas prices,” explained LPL Financial Chief Investment Officer Burt White. “But on the other side, Russia and OPEC have flooded the oil market with cheap barrels and driven prices sharply lower, which hurts the United States as the largest producer in the world.”

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Stocks moved lower on the week as volatility in the oil patch dominated headlines. Prices for the May contracts for WTI crude oil briefly vaulted into negative territory ahead of the settlement date on April 21. Jobless claims continued to climb at a record pace, though the growth rate declined for a third consecutive week.

The S&P 500 Index moved lower, breaking a two-week winning streak. The Dow Jones Industrial Average lagged while the Nasdaq outperformed, losing less than 0.2% for the week.

Small caps outperformed large caps for only the sixth week this year. Growth-style stocks led value again, following his

With 20% of S&P 500 Index companies having reported first quarter results so far, earnings season has been a mixed bag. In our April 13  earnings preview, we noted that S&P 500 Index earnings for the quarter were expected to decline 10% year over year, based on FactSet’s consensus estimates from analysts. That number is minus 15% now, largely due to weaker-than-expected results for the financials sector so far. Meanwhile, estimates for the second quarter have fallen from an expected 11% decline on April 1 to a 31% decline as of Thursday, as analysts have updated numbers to factor in what they have learned from companies and