Markets can go to zero, where the price of an asset is worthless. Many stocks and bonds have lost all value when defaults and bankruptcies occur. In the world of commodities, a glut in the onion futures market sent the price to zero years ago. Longs took delivery of the onions, dumped them in rivers, and sold the burlap bags. In the electricity market, power along a transmission line is a use-it or lose-it proposition. During periods of oversupply, a position in the commodity can become worthless.
In an environment of demand destruction on the back of coronavirus, the members of OPEC and Russia dealt the market a substantial blow when they decided to flood the world with petroleum. The move was likely an attempt to force marginal producers in the United States out of business. However, the Saudis, Russians and other producers may have shot themselves in the foot as the price became a falling knife and halved in value. Now, some analysts are saying that the price of the energy…
