Adam S. Nagy, Master in Finance and Teaching Assistant at MIT Sloan School of Management
Robert C. Merton, School of Management Distinguished Professor of Finance at MIT Sloan School of Management and Co-Director, MIT Golub Center for Finance and Policy
The pandemic is causing disruptions in financial markets in a variety of novel ways. For the first time, certain oil prices dipped into negative territory. In “Negative WTI Crude Futures Prices Event Study,” Robert Merton and Adam Nagy explain why this happened. They write:
“This paradox of negative price can occur because there is no free disposal of the asset. Much like toxic waste or even garbage, we have to pay to have someone take these materials away.“