The price of the current oil futures contract could go to zero again even faster than the May contract did in last week's historic plunge, CNBC's Jim Cramer said Monday.Â
"This has to go to zero again, because we haven't any more space," Cramer said on "Squawk on the Street." "I had Herbjorn Hansson, who's the CEO of the largest tanker company, Nordic American Tanker, on Friday, and he said look there's no room. So why shouldn't this number go to zero? It should go to zero faster than it did last time."
The May futures contract for West Texas Intermediate crude closed in negative territory on April 20, the day before the contract expired, as traders scrambled to avoid taking physical delivery of the oil amid light volume. Global energy demand has fallen drastically as the coronavirus pandemic shutters factories and limits travel around the world, leading to a glut of oil and dwindling space to store it.
Though futures contracts on other commodities, including natural gas, had broken below zero before, this was the first time the WTI went negative. The June contract also fell sharply on that day but stayed positive.
Still, on Monday morning the June contract was trading at less than half of where it settled on April 2.
Cramer said that the historic plunge showed that the futures market, including the United States Oil Fund, was flawed.Â
"I think the futures distinguished themselves as being, let's just say, totally disingenuous. The idea of what happened last week with the minus-37 has to do with the fact that there are a couple of financial instruments that are just wrong. They are broken," Cramer said.
Terry Duffy, chairman and CEO of the CME Group, said last week that the futures market worked "to perfection" as the May contract approached expiration. Duffy said that it was no surprise that the oil contracts could go negative and that only professional investors were still in the market when the price dropped below zero.