May 14, 2020 / 12:14 PM / 21 days ago

U.S. commodities regulator warns of more volatility, possible negative prices - letter

May 14 (Reuters) - The top U.S. commodities markets regulator warned exchanges and brokerages in a letter to be prepared for volatility and possible negative pricing for certain contracts, nearly one month after the U.S. oil futures contract plunged into negative territory for the first time in history.

The Commodities Futures Trading Commission, the federal agency overseeing futures and options trading, said in a letter dated Wednesday that exchange operators and brokerages need to consider their internal risk controls and protect markets from manipulation.

The notice comes before next week’s expiration of the U.S. West Texas Intermediate crude contract for June delivery. Last month, the expiring May contract fell deep into negative territory as investors bailed out upon realizing that many would have to take physical delivery of oil barrels with storage filling rapidly. (Reporting By David Gaffen Editing by Chizu Nomiyama)

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