For most people, the idea of looking back on the last year is probably not that appealing. The phrase “because, you know, 2020…” has become a punchline, and for good reason. This year will forever be remembered as the year that Covid-19 arrived, killing hundreds of thousands of Americans and over 1.5 million people worldwide. With that tragedy came the attempts to limit the carnage, at least for a while, businesses closed, and people stayed at home, resulting in the largest single-quarter drop in GDP ever, massive job losses and devastation for small businesses.
Still, looking back is what most people, and especially traders, do at this time of year. We learn from our mistakes, resolve to repeat our successes, and make educated guesses as to what we can expect next year.
From an energy trading and investing perspective, 2020 was a historic year. It started well enough, with WTI trading above $60, then the decline began. It was so big and so fast that in April, for the first time ever in the long history of oil futures trading, a contract went negative. For a short time, rather than paying for crude, you got paid up to $37 a barrel for taking it as a contract expired. Even for delivery a month out, WTI traded as low as $6.50 per barrel... That was the result of a “perfect storm” of epic proportions.
U.S. output, encouraged by a White House that seemed intent on repealing every regulation on the oil industry, passing every…