>Note that this is for the May contract, which closes tomorrow, and anyone left with a contract then will have to actually take delivery of the physical product.
Not really. Almost all contracts are cash settled.
Not really. Almost all contracts are cash settled.
The parent comment is 100% correct. You're missing the nuance of how commodity futures trading works. Yes most are cash-settled but there is a date after which if you hold the contract you're promising to make or accept physical delivery. The commenter is saying we reach that point for the May oil contract tomorrow so anyone who wants to settle in cash has to do so by tomorrow.
The specs for delivery are always very clear because price depends on where it needs to be delivered!
"Delivery shall be made free-on-board ("F.O.B.") at any pipeline or storage facility in Cushing, Oklahoma with pipeline access to Enterprise, Cushing storage or Enbridge, Cushing storage."
What does it mean to be "normally not a destination for oil" and who is doing this checking (do you realize the volume of oil that is traded monthly? The futures market being discussed here uses standardized contracts.
Edit: finally found it: https://thedailywtf.com/articles/Special-Delivery
https://www.passeidireto.com/arquivo/73586616/john-c-hull-op...
https://www.npr.org/sections/money/2018/09/19/649273647/epis...
When the contract approached the settlement date, the broker called to ask him to sell. Trouble was, my grandfather just wanted cows, not cash. The broker was frustrated to no end.
Long story short, my grandfather got the cattle, as the contract required, but was asked by the broker never to do business with them again.
N.B. Don't do this unless you're interested in financial silliness, or if the futures are really badly mispriced. It is a lot easier, and you get to see the cattle first, if you buy through a local cattle auction.
Thus, traders who still have contracts open but cannot take physical delivery will have to close their positions out today or tomorrow, thus causing the dip we are seeing.