Oil plunges below zero for first time with May contract ending

Post by hnick » Tue, Apr 21, 2020, 1:23 AM UTC

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.…

Post by typon » Tue, Apr 21, 2020, 1:32 AM UTC

hermitdev wrote: post #497

typon wrote: post #295

Earlier quoted context omitted.

I wonder if that negative int broke a bunch of code in software around the world

I work in finance. I literally ask this question of my boss today as I deal with market data. Didn't want a negative price to fuck with our systems (I've only been at the firm for 1 year, so not entirely comfortable with all our systems). Thankfully, we don't do much with futures, so we weren't too badly affected by this. Also, we don't use int's. We use proper decimal types for currency values.

Post by jliptzin » Tue, Apr 21, 2020, 1:55 AM UTC

aguyfromnb wrote: post #260

jliptzin wrote: post #231

Earlier quoted context omitted.

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 ?

Post by alvah » Tue, Apr 21, 2020, 2:33 AM UTC

manquer wrote: post #364

BurningFrog wrote: post #323

Earlier quoted context omitted.

This was at least originally about a strange oils price war between Saudi and Russia. It just happened to coincide with the pandemic. Though I'd guess by now the pandemic adds fuel to the non-fire.

Not really , Chinese demand had dropped sharply in late January due civoid shutdowns . The original production cut discussions were influenced by that significantly. Saudi/Russia likely did not anticipate a global lockdown and decided to get into a price war to keep their absolute revenue numbers stable albeit by increasing production under reduced prices ,that has of course backfired spectacularly.

Post by divbzero » Tue, Apr 21, 2020, 2:54 AM UTC

hermitdev wrote: post #456

lordnacho wrote: post #406

Earlier quoted context omitted.

> What I don't understand is why the sudden move today? Did the longs think they had a place to put the oil on Friday but found out over the weekend they had no place to put it? Just seems like you would know what to do with the oil on Friday. Note this is not a rhetorical question, I would sincerely like an answer. Guys like myself, an ex fund manager, could be tourists in the oil market. I know I was, speculating o…

This reminds me of Brian Hunter [0] of Amaranth fame. He was on the wrong side of a huge (multi billion USD) long trade on Natural Gas. When faced with losing it all, he doubled down. Blew up Amaranth. $9B USD hedge fund blew up basically overnight. Margin calls, etc, etc. Disclaimer: I worked for the hedge fund at the time that bought Amaranth's holdings for pennies on the dollar. Was supposed to be a joint buyout w…