Oil plunges below zero for first time with May contract ending • Hacker News Board

Re: Oil plunges below zero for first time with May contract ending

#71

Post by NicoJuicy » Mon, Apr 20, 2020, 3:02 PM UTC

yur3i__ wrote: post #26

bob33212 wrote: post #20

What happens when Saudi Arabia collapses? Does the royalty get the fuck out of town on their private jets with as many gold bars as they can carry?

UAE and Saudi Arabia imo will be ok. They are trying to build themselves into big entertainment and tourism hubs with their ventures into sports and investment in tourism etc I think though they will definitely suffer they may be able to weather the storm. Kuwait and Qatar on the other hand I'm not so sure about

It's artificial.

You are forgetting the costs of running a city in the middle of a dessert.

Re: Oil plunges below zero for first time with May contract ending

#72

Post by somebodythere » Mon, Apr 20, 2020, 3:03 PM UTC

lonelappde wrote: post #54

I understand that it's hard to stop oil production, leading to pileups. But even after 2 months it's still unstoppable?

Nobody wants to cut production, unless everyone else does so too. Otherwise they're just giving up a chunk of their revenue stream for a negligible rise in prices. It's a classic prisoner's dilemma game.

Anyway, OPEC+ did cut production, a little bit. The market is saying it's not enough, at least in the near term.

Re: Oil plunges below zero for first time with May contract ending

#73

Post by yingw787 » Mon, Apr 20, 2020, 3:03 PM UTC

carlsborg wrote: post #11

Crude spot at $10.80 right now. 40 percent crash in an day.

I pay more for a Chipotle burrito (with guac of course, can't live without guac). This is incredible.

Re: Oil plunges below zero for first time with May contract ending

#74

Post by dsfyu404ed » Mon, Apr 20, 2020, 3:03 PM UTC

lonelappde wrote: post #62

frankchn wrote: post #50

Note that this is for the May contract, which closes tomorrow, and anyone left with a contract then will have to actually take delivery of the physical product. Since we are in supercontango (oil storage is full, causing spot prices to be significantly lower than forward prices), I am guessing that traders who are still holding on to contracts and don’t have available storage have to unload contracts pretty quickly.…

Would they take delivery or would they pay the producers to dump it in the dirt or ocean? Oops into the ocean is cheap storage of useless oil.

The producers aren't gonna dump it (at least not in the US) because that is a surefire way to not only have the EPA bend them over but to have the EPA bend them over with the blessing of public opinion. Nobody wants to have their company be associated with pictures of oil soaked wildlife.

Re: Oil plunges below zero for first time with May contract ending

#75

Post by protomyth » Mon, Apr 20, 2020, 3:04 PM UTC

MrGilbert wrote: post #63

I'm a software developer, which translates to being somehow smart, but I'm not that into economics: Will this have a rubber band effect? E.g., the price will skyrocket in the next 2 - 5 years, because of this?

I have my doubts. TX and ND can reopen wells pretty quickly, so there is a max limit on the price going up. Plus, fracking efficiency is going to go up with better techniques.

Re: Oil plunges below zero for first time with May contract ending

#76

Post by onlyrealcuzzo » Mon, Apr 20, 2020, 3:05 PM UTC

fmajid wrote: post #44

drcode wrote: post #27

Earlier quoted context omitted.

This seems unlikely to me, given the low extraction costs they have for oil. I guess the biggest danger they would face is if they have to stop "paying off" their population, and this leads to an "arab spring" type of situation. But it seems even in that case they would unfortunately have the will and resources to use Syria-style brutal tactics to contain any uprising.

The limited success of their war on Yemen, despite having the 3rd largest military budget in the world, says otherwise.

So you're saying KSA has a higher military budget than 1) The US, 2) China, or 3) Russia?

Re: Oil plunges below zero for first time with May contract ending

#77

Post by bootloop » Mon, Apr 20, 2020, 3:05 PM UTC

MrGilbert wrote: post #63

I'm a software developer, which translates to being somehow smart, but I'm not that into economics: Will this have a rubber band effect? E.g., the price will skyrocket in the next 2 - 5 years, because of this?

> I'm a software developer, which translates to being somehow smart

I wish this was true.

Re: Oil plunges below zero for first time with May contract ending

#78

Post by dd36 » Mon, Apr 20, 2020, 3:05 PM UTC

dsfyu404ed wrote: post #74

lonelappde wrote: post #62

Earlier quoted context omitted.

Would they take delivery or would they pay the producers to dump it in the dirt or ocean? Oops into the ocean is cheap storage of useless oil.

The producers aren't gonna dump it (at least not in the US) because that is a surefire way to not only have the EPA bend them over but to have the EPA bend them over with the blessing of public opinion. Nobody wants to have their company be associated with pictures of oil soaked wildlife.

EPA isn’t enforcing right now.

Re: Oil plunges below zero for first time with May contract ending

#79

Post by lonelappde » Mon, Apr 20, 2020, 3:06 PM UTC

jimbob45 wrote: post #40

yur3i__ wrote: post #26

Earlier quoted context omitted.

UAE and Saudi Arabia imo will be ok. They are trying to build themselves into big entertainment and tourism hubs with their ventures into sports and investment in tourism etc I think though they will definitely suffer they may be able to weather the storm. Kuwait and Qatar on the other hand I'm not so sure about

I haven't done much research but that's pretty funny if you're correct. The middle east has done their darndest trying to make sure women feel as unwelcome as possible in their domain. Gonna be tough to establish a tourism industry when you've alienated half the world's population (this isn't even a commentary on women's rights - you simply can't alienate half your customer base and think it's not going to affect you…

Their vastly expensive polluting tourism isn't aimed at people with moral values, and they loosen the rules for tourists. They aren't dumb.

Re: Oil plunges below zero for first time with May contract ending

#80

Post by at-fates-hands » Mon, Apr 20, 2020, 3:06 PM UTC

bob33212 wrote: post #20

What happens when Saudi Arabia collapses? Does the royalty get the fuck out of town on their private jets with as many gold bars as they can carry?

They've been talking about the House of Saud falling for decades now and it hasn't happened yet. Although I thought A few years ago the young prince was going to make a bunch of drastic moves away from oil in order to secure the economic future of the country?

Beyond a few articles in 2017, I haven't seen much of an update on that, anybody know if it was all just bluster, or are real things happening that would soften this blow coming?