Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

Oil plunges below zero for first time with May contract ending

bloomberg.com

Post reply on HN
Print view View original

271–280 of 546 posts

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

#271

Post by marcosdumay »

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…

Alienating half of the world's population isn't even as much of a problem, but they also managed to do so in the only way that it is homogeneously distributed over the entire world.

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

#272

Post by [deleted] »

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.…

[deleted]

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

#275

Post by slg »

umeshunni wrote: post #142
bluedino wrote: post #103

Earlier quoted context omitted.

"My grandfather rode a camel, my father rode a camel, I drive a Mercedes, my son drives a Lamborghini, his son will drive a Lamborghini, but his son will ride a camel"

Actual quote was by the Sheikh of Dubai: "My grandfather rode a camel, my father rode a camel, I drive a Mercedes, my son drives a Land Rover, his son will drive a Land Rover, but his son will ride a camel" https://en.wikipedia.org/wiki/Rashid_bin_Saeed_Al_Maktoum

For interesting context, the man who said that was born in 1912, his eldest son was born in 1943, and his eldest grandchild that I can find in 30 seconds of research was born in 1976. That is were the Wikipedia articles stop but the child predicted to ride a camel is certainly alive today and they might even already know how to drive.

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

#276

Post by greenshackle2 »

tempsy wrote: post #254
greenshackle2 wrote: post #249

Earlier quoted context omitted.

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

if only arbitrage was that easy...

You still have to store the oil for a month. Which is expensive right now. Which is precisely why the May future is so cheap in the first place. I'm just rebutting that you will be stuck with the oil after June. Since they specifically said, they would sell a June contract immediately.

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

#277

Post by gezh »

caleb1666 wrote: post #199

Do we know what percentage of futures participants are speculators just at the casino? It seems like the percent of players actually making/taking physical delivery is like 0.0000001%

Currently, speculators make up roughly 2/3rds of the outstanding WTI contracts [1].

In most commodities contracts taking/making physical delivery by physical players is rare. The physical delivery option is there to make sure that the underlying commodity market and the futures market converge; and you don't need someone to actually deliver to make that happen. The threat of delivery/taking delivery is usually enough.

[1]You can get that info from the CFTC here: https://www.cftc.gov/MarketReports/CommitmentsofTraders/inde..., namely in this report: https://www.cftc.gov/dea/options/deanymelof.htm . Look for "CRUDE OIL, LIGHT SWEET".

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

#278

Post by eru »

aguyfromnb wrote: post #257
jjallen wrote: post #213

Earlier quoted context omitted.

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.

How to prepare:

Sell futures on Friday, buy today (to close out the position). Profit from the predictable price difference.

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

#279

Post by refurb »

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?

Just a guess, but maybe the consensus is that June is going to be the same (or worse) as May and they are going to have trouble unloading those contracts?

It may come to the point that you're paying some to take the contract.

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

#280

Post by vkou »

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?

Because you can't just rent a U-Stor-it space, and dump a bunch of full oil barrels into it. You need a specialized facility.

And all of those facilities are full. The ones that aren't are charging an arm and a leg for storage services.

Post reply on HN