Hi John,

Actually, the May contract that went -$40 yesterday does not expire until today but the squeeze happened yesterday..........when the big funds that had been long forever all got forced out as well as other large longs with the panic selling/exhaustion in negative territory.

Massive margin calls and losses, as well as the soon to expire front month having almost no volume left to offset the selling, resulted in prices collapsing lower to find offsetting bids to meet the panic selling. 

A month ago, for instance, somebody selling 100 contracts of May crude, could probably get them sold with in 5c of the market price, just like they can with the June contract today. However, in yesterdays thin volume trading, selling 100 contracts of crude at the market may have forced the market down $1.

Recent daily volume for May crude averaged well over 1/2 million contracts, with a few volatile days peaking just above 1 million. Yesterday, even though we had the most extreme day in history by a wide margin(that often causes high volume) featured less than 200 thousand total contracts traded and the lowest volume for May, since it was the front month. 

When a contract is expiring..........ALL speculators must get out or risk being forced to take delivery(if long) of the product(or legally make arrangements to do so). In this environment, some that otherwise might stay long to take delivery........WHEN STORAGE SPACE HAS VANISHED, also had to get out, which magnified the selling even more.

So the June contract will be the front month on Wednesday but is getting all the volume now. It looks like the volume today in the June has set a record by a wide margin.

June may trade 2 million contracts today, which for this contract, is almost double the most it ever traded in 1 day and higher in history than any day, I think.

Obviously, being down sharply..........back down below $13, it's massive, massive selling that is pushing us sharply lower but its taking 20 times the volume than what did it to the May contract yesterday to accomplish this because we have 20 times the buy orders below the market to meet the selling, since the June contract has a month left of trading and plenty of traders willing to take both sides. 

Some traders selling today may still be long lived longs getting out but some are new traders that think that $20 crude oil, yesterdays price, was too expensive and want to be net short, with an expected drop in price over the next month.

The only traders that would be net short in an expiring contract would mainly be those that actually have crude or the commodity to sell. 

A farmer for instance that forward contracts selling December corn in the month of March for instance to hedge his crop, can stay short thru expiration and deliver his crop for the expiration price.

Let's say Dec corn expires at $2.90. A horrible price, lowest in 15 years but he put on a short in March, to hedge his crop when corn was trading at $3.30/bushel.

He captures 40c(2,000/contract) in the futures market(which is the hedge) on expiration and in essence, had locked in $3.30/bushel for his selling price back in March. 

Futures markets were originally designed as vehicles for these transactions between producers and end users...........to lock in favorable prices to keep their business's running profitably. 

Speculators, however are what makes the market so liquid. The vast majority of volume every day comes from speculators. This pften makes it much easier for large producers and end users to use the futures.

Unfortunately, in bearish times like this, when large speculative funds are piling on the shorts in corn(because they see the bearish fundamentals ahead and are counting on lower prices), they push the price farther south and sooner, which screws a farmer who might want to sell his crop early. If not for the fund selling recently, for instance, the price of corn might be 30c higher than it is. 

It would have probably dropped down here..........but taken a couple more months to day it. Large specs just force price moves earlier and to bigger extremes.