Crude oil prices have seen record moves last week as the capitulation in concerns for the demand outlook resulted in a downside shock with prices breaking below $0 for the first time on record, posting lows of -$37.63 on the May 2020 CME Crude Oil Futures Contract.

We are taking all possible measures to assist our traders through this current market turbulence.

In order to address the extreme volatility and ensure safe and orderly trading for our clients, we have increased margin requirements on WTI and Brent Cash products and set those products to ‘Reduce Only’ mode.

How is the Cash WTI product priced?

There is no reference exchange market for an oil spot price. In a normal market, the spot pricing by any broker will be similar. In abnormal, dysfunctional market conditions, pricing can significantly differ. Spot prices are derived from the underlying relevant commodity futures contract by removing the implied holding costs.

Tickmill partners with the top Liquidity providers in the industry in order to provide the best pricing and trading conditions for its clients. The Cash Crude Oil pricing is usually calculated using the front month underlying futures price. Due to the disorderly market, and the May Futures contract getting settled in the negative territory, the December 2020 contract is now being used as the basis for calculating our WTI crude oil spot CFD prices.

The daily fluctuations in our spot price will follow the December 2020 Futures contracts which are more stable, and much less sensitive to the current imbalances in the oil markets. Cash WTI prices will gradually converge to December 2020 contract prices at a moderate pace which will protect clients from extreme volatility and significantly reduce the holding costs. Depending on the market conditions going forward, we may rebase our Cash pricing to other Future contracts to ensure an orderly trading environment for our clients.