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

521–530 of 546 posts

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

#521

Post by marcosdumay »

symplee wrote: post #501
patall wrote: post #458

Earlier quoted context omitted.

Interesting math question: When we now start at a negative price tomorrow, what does a percentage change mean? Today, we have got losses >100%, unusual but obviously possible. But if price changes tomorrow from say $-10 to $10, is that again -200%? Does a change from $-10 to -$20 mean +100%? (I obviously know percentage changes are not made for this)

Follow up question: If it had ended at zero dollars, then the next day jumps to $5, what's the percentage change?

Follow up answer, it's never zero dollars.

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

#522

Post by altcognito »

beervirus wrote: post #465
altcognito wrote: post #395

Earlier quoted context omitted.

"Running out of oil" and "peak oil" would be two completely different things. Lightheartedly pointing out something as if it didn't happen when in fact it did happen, will get you downvoted. It is easy to agree that "running out of oil" sometimes was conflated with "peak oil", but alas, that's just ignorance.

Except it hasn't happened yet. https://en.wikipedia.org/wiki/File:Global_liquids_and_US_tig...

Perhaps I was not clear. This graph you are sharing is shale oil, not the pure stuff found in oil shales. Regular oil production reached peak in 1970. We invented new sources that were considered untappable because of the expense of extracting it at one point. I'm not saying this is bad, I'm just saying that peak oil, as it was originally defined, is very much a real thing.

On the plus side for oil enthusiasts, we will probably not run out of the more dirty variety for quite some time.

https://en.wikipedia.org/wiki/Peak_oil#/media/File:Hubbert_U...

(also see article refered to by this)

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

#523

Post by nkurz »

hermitdev wrote: post #469
cma wrote: post #396

Earlier quoted context omitted.

I think he's asking why the market didn't have a better estimate of storage capacity and utilization and what changed in the estimate from yesterday to today.

I'm going to take a stab at a possible reason the "market" didn't see this coming: Everyone expected the US to top off its strategic reserves, which so far hasn't really been happening. Now that You could be paid like $37 (west Texas crude closed at -$37.63) dollars/barrel, maybe the US will reconsider. I certainly wish I could store a few thousand barrels... US companies don't want to stop producing oil. Couple that…

> Now that You could be paid like $37 (west Texas crude closed at -$37.63) dollars/barrel, maybe the US will reconsider.

Indeed, it looks like the US is reconsidering:

President Donald Trump said Monday the U.S. is "looking to" add as many as 75 million barrels of oil to the Strategic Petroleum Reserve. Trump spoke after an historic day in the oil CL.1, +103.61% markets, in which the May WTI crude contract closed at -$37.63 a barrel, a one-day drop of 306%. Trump said he was considering the move "based on the record low price of oil," and that the action would "top it out." Speaking at a White House press briefing, Trump said, "we'd get it for the right price."

https://www.marketwatch.com/story/trump-says-us-looking-to-a...

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

#524

Post by MR4D »

baggy_trough wrote: post #491
MR4D wrote: post #483

Earlier quoted context omitted.

One thing is clear to me - somebody is getting fired this week. Not sure if it's a hedge fund or producer, or a trader or a team, but someone is getting fired.

Everyone is getting fired.

Not likely. This could actually be one person/team who was out of balance on their book.

Back in 2008 when oil hit $150, it was due to a single trader. Needless to say, everyone in the industry was pissed at him afterwards.

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

#526

Post by JBSay »

dragonwriter wrote: post #432
cma wrote: post #388

Earlier quoted context omitted.

That still doesn't answer: why wasn't it anticipated and reflected in earlier pricing (even if volume-weighted it would be a much smaller drop, it still seems to have been missed even from futures options)?

> That still doesn't answer: why wasn't it anticipated and reflected in earlier pricing Because despite the people that like saying all future events are reflected in current prices, the fact is humans, both individually and aggregated into markets, are imperfectly prescient, thus future events are basically never perfectly priced in to to current market prices.

Nobody says that. All KNOWN future events are priced in. We are not doing divination here.

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

#527

Post by eru »

fredophile wrote: post #484
eru wrote: post #380

Earlier quoted context omitted.

It wasn't predicted successfully on average. Otherwise Friday would have already anticipated today's price.

How far do you want to take that argument? If successfully predicting it would mean that prices dropped to zero on Friday then shouldn't that have also been successfully predicted and impacted the price on Thursday? What about Wednesday, Tuesday, Monday?

Yes, that's exactly right.

But no one expects perfect predictions far into the future.

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

#528

Post by _8j50 »

yingw787 wrote: post #158
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 this comes to pass, I'm all for it. If we could take the demand we saw for oil, and put it into demand for high-speed Internet, we could see completely new, blue ocean markets. Imagine a surgeon being able to control a robotic surgery tool from the comforts of his/her home, where you have to have extremely low-latency or guaranteed low-latency networks. Or imagine mecheng offices running simulation jobs in the clo…

This also means depending on the internet. In the near future even isolated regional ISP outages would have bigget impacts on the economy

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

#529

Post by [deleted] »

typon wrote: post #513
hermitdev wrote: post #497

Earlier quoted context omitted.

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.

Arbitrary sized decimals? How do you deal with floating point math problems?

[deleted]

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

#530

Post by LatteLazy »

asdfman123 wrote: post #345
LatteLazy wrote: post #168

Earlier quoted context omitted.

Yes, except they already took almost all the wealth out of the country so no need for gold bars rolling about on planes...

Why take gold bars on airplanes when you can hire accountants to create shell companies with foreign bank accounts?

Why do either when you can just open an account in your own name in the USA and poor cash I to it? The minute Saudi starts to collapse, your allies have guaranteed you a visa so you can fly over, finally drop all this pious Muslim crap and spend your I'll gotten gains.
Post reply on HN