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Oil plunges below zero for first time with May contract ending

bloomberg.com

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

#251

Post by mschuster91 »

DuskStar wrote: post #31
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

Saudi Arabia is trying to build tourism? From where?

Don't forget Saudi-Arabia is controlling Mekka, the holiest site of Islam which every Muslim with the means and ability to do so must visit once as a pilgrim in his/her life time. There are something about 1.5 to 1.8 billion Muslim people on this planet, that definitely is a base to build a tourism industry on!

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

#252

Post by bluGill »

kietdlam wrote: post #237
tempsy wrote: post #220

Earlier quoted context omitted.

Most oil traders don’t actually want physical delivery. They are just trying to profit off price movements. Traders have moved on to June contracts already. There’s no volume on May contracts at this point. No one wants to actually pay for physical delivery so the price is tanking since there are no bids as we get closer to expiration tomorrow.

You still haven't answered the question...

Most traders don't have any oil to sell. What is left are those who have storage space making a deal on the traders too stupid to get out already. This isn't many, but since there is no demand those with storage space can offer very low prices and get the rest of them.

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

#253

Post by mettamage »

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?

> which translates to being somehow smart

I've seen smart software developers abandoning their reason and logic in other areas of life. Being smart in one area doesn't necessarily mean you're smart in another, even when the skills are transferable! It varies on a person by person basis (I also met smart software devs who used that knowledge to be smart in other fields).

If you want to know how things like this can happen from a neuroscience point of view, read up on Damasio and his somatic marker hypothesis. It's a related/similar phenomenon.

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

#254

Post by tempsy »

greenshackle2 wrote: post #249
tempsy wrote: post #232

Earlier quoted context omitted.

What are you going to do with the oil after one month? No one needs oil right now so if you take physical delivery it’s going to be sitting there for longer than a month.

> selling the June contract at the same time They would not be the one holding that particular bag.

if only arbitrage was that easy...

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

#256

Post by marcosdumay »

ardy42 wrote: post #174
nopinsight wrote: post #149

If the pandemic lasts longer than 6 months, which is quite likely, many high-cost oil producers might not survive. Some would argue this could lead to shortage and a much higher price later on, but long-term oil demand could also be affected. There might be some semi-permanent change in people's behaviors if the epidemic continues for many months. Many people will form a habit of doing more things at home/online: mor…

> If the pandemic lasts longer than 6 months, which is quite likely, many high-cost oil producers might not survive. Some would argue this could lead to shortage and a much higher price later on, but long-term oil demand could also be affected. Even if they all declared bankruptcy, their infrastructure would still be there. I'd imagine someone would buy it and bring it back online if/when prices recover.

Depreciation exists, and for mining investments, it's quite fast. Without extra investments, in 3 years most of that infrastructure won't be there anymore.

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

#257

Post by aguyfromnb »

jjallen wrote: post #213
tempsy wrote: post #207

Earlier quoted context omitted.

It’s called super contango. And storage has not run out yet. Cushing is not full. The problem is traders are anticipating storage will become very expensive as remaining capacity decreases, so if you’re holding on to May contracts and you’re not using the oil because there’s a glut right now then you’re going to be paying a lot more to keep storing the oil for future months as storage costs go up. The huge discount r…

Sorry to miss it, but how does this answer my question? I asked why they weren't prepared on Friday. Storage has been expensive and getting more expensive for weeks. We've been in a massive contango for weeks. Why weren't they prepared on Friday for physical delivery?

>I asked why they weren't prepared on Friday.

What, exactly, do you expect them do to "prepare"? Friday they had more time to unload the contracts, and today they have less.

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

#258

Post by Retric »

pythonaut_16 wrote: post #247
yingw787 wrote: post #170

Earlier quoted context omitted.

If last-mile network is too much, you could have a colocated office park / operations center next to a hospital with a dedicated high-speed network. Then each surgeon can schedule / manage a patient without having to walk to a different OR, change scrubs, or be exposed to contagious viruses. Mecheng tasks could be async / queue-based and latency wouldn't matter too much. Regardless, I think it's really important to k…

How common are robotic surgeries today? Are there benefits to having a machine do the cutting?

It’s common enough not to be a gimmick, but the real advantage is allowing surgery to be done by a limited pool of specialists that can cover wide areas.

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

#259

Post by tempsy »

kietdlam wrote: post #237
tempsy wrote: post #220

Earlier quoted context omitted.

Most oil traders don’t actually want physical delivery. They are just trying to profit off price movements. Traders have moved on to June contracts already. There’s no volume on May contracts at this point. No one wants to actually pay for physical delivery so the price is tanking since there are no bids as we get closer to expiration tomorrow.

You still haven't answered the question...

things happen when you get closer to contract expiration. Today is closer than Friday.

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

#260

Post by aguyfromnb »

jliptzin wrote: post #231
tempsy wrote: post #207

Earlier quoted context omitted.

It’s called super contango. And storage has not run out yet. Cushing is not full. The problem is traders are anticipating storage will become very expensive as remaining capacity decreases, so if you’re holding on to May contracts and you’re not using the oil because there’s a glut right now then you’re going to be paying a lot more to keep storing the oil for future months as storage costs go up. The huge discount r…

If cushing is not full, why aren't people buying at $2 a barrel now and storing for one month, selling the June contract at the same time and collecting a $20k profit per contract?

>why aren't people buying at $2 a barrel now and storing for one month, selling the June contract at the same time and collecting a $20k profit per contract?

Good question. The answer is because they don't think it will be profitable. Why aren't you?

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