US oil prices turn negative as demand dries up
1–10 of 130 posts
Re: US oil prices turn negative as demand dries up
#2this is insane
Re: US oil prices turn negative as demand dries up
#3anybody know how many barrels were actually sold at that price? $0 is one thing, but I'm shocked at the minus $38. It could not have been large.
Re: US oil prices turn negative as demand dries up
#4More specifically, West Texas Intermediate Crude futures for early May delivery are sub-zero. Late-May delivery is more expensive.
This is in part a reflection of the fact that the oil producers have already been paid for the output and are contractually obligated to deliver it, but no one actually really has a use for it once it is there, and it will cost money to transport or store it.
Re: US oil prices turn negative as demand dries up
#5anybody know how many barrels were actually sold at that price? $0 is one thing, but I'm shocked at the minus $38. It could not have been large.
“oil firms have resorted to renting tankers to store the surplus supply and that has forced the price of US oil into negative territory”
Re: US oil prices turn negative as demand dries up
#6anybody know how many barrels were actually sold at that price? $0 is one thing, but I'm shocked at the minus $38. It could not have been large.
No demand, surplus inventory already out there, so taking possession in May requires storing them indefinitely.
Investors decided to factor that cost in when buying these.
Re: US oil prices turn negative as demand dries up
#7Futures prices are significantly higher than $0. This is less noteworthy than it seems.
https://www.marketwatch.com/investing/future/crude%20oil%20-...
Re: US oil prices turn negative as demand dries up
#8Matt Levine's explainer https://www.bloomberg.com/opinion/articles/2020-04-20/there-...
Re: US oil prices turn negative as demand dries up
#9anybody know how many barrels were actually sold at that price? $0 is one thing, but I'm shocked at the minus $38. It could not have been large.
You can look up the volume: https://www.marketwatch.com/investing/future/cl.1/charts -- between 2:20-2:25, EST, for example, volume was 748 contracts (748,000 barrels) at -$37.11.
Re: US oil prices turn negative as demand dries up
#10So they start off the article with this statement:
"That means oil producers are paying buyers to take the commodity off their hands over fears that storage capacity could run out in May."
This statement is actually totally false. Producers already got paid for this production a long time ago when they initially sold the futures contract. What has actually happened is that as the expiry of the May futures contracts arrives, the traders who bought those contracts are now trying to unload them at all costs. This is because if they're stuck holding the contract at expiry, they have to take physical delivery (each futures contract represents 1000 barrels of oil), and the cost of storing that oil is getting really high since the storage facilities are nearly full.
Later they kind of explain this in the article:
"The severe drop on Monday was driven in part by a technicality of the global oil market. Oil is traded on its future price and May futures contracts are due to expire on Tuesday. Traders were keen to offload those holdings to avoid having to take delivery of the oil and incur storage costs."
But I think it's pretty irresponsible journalism to kick off the article the way they did, and imply that producers are paying you to take their oil today.