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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

#191

Post by clomond »

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…

Factoring in as well impact to air travel (business & leisure), cruising and the likelihood that it will take some time for certain sectors of the world (Travel and Tourism comes to mind) years to reach back to 100% of 2019 levels even in a post vaccine world.

This not factoring in the structural changes to demand like electrification, and who knows what kind of energy transition stimulus money could be deployed in the coming quarters to kick start things back.

I am thinking it is of ever increasing likelihood that the “most oil consumed in a day ever” in human history could actually behind us.

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

#192

Post by singlow »

xnyan wrote: post #167
koheripbal wrote: post #153

Earlier quoted context omitted.

This is obviously wrong. You cannot dump oil, and anyone found to be dumping will be prosecuted. READ THE EPA STATEMENT.. https://www.epa.gov/sites/production/files/2020-03/documents... > The enforcement discretion described in this temporary policy do not apply to any criminal violations or conditions of probation in criminal sentences. ... > This policy does not apply to imports. They are relaxing REPORTING require…

This is obviously wrong. The EPA has explicitly stated they will not be enforcing regulation. Source: https://thehill.com/policy/energy-environment/489753-epa-sus...

From the memo that generated the news story you linked:

> IV. Accidental Releases Nothing in this temporary policy relieves any entity from the responsibility to prevent, respond to, or report accidental releases of oil, hazardous substances, hazardous chemicals, hazardous waste, and other pollutants, as required by federal law, or should be read as a willingness to exercise enforcement discretion in the wake of such a release.

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

#194

Post by chasd00 »

jobu wrote: post #150
bob33212 wrote: post #20

What happens when Saudi Arabia collapses? Does the royalty get the fuck out of town on their private jets with as many gold bars as they can carry?

Saudi Arabia still has the cheapest oil production costs in the world at $8.98/barrel ( https://en.wikipedia.org/wiki/Price_of_oil#Comparative_cost_... ) They probably aren't making enough right now to pay for all of their commitments, but they definitely aren't losing money and they can likely borrow in the short term.

It's not that they are losing money on production, the state budget is in the red with a price less than about $80/bbl

https://www.reuters.com/article/us-saudi-economy-budget/saud...

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

#195

Post by [deleted] »

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

[deleted]

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

#196

Post by thoraway1010 »

bluGill wrote: post #125
cletus wrote: post #108

Earlier quoted context omitted.

> Not really. Almost all contracts are cash settled. The parent comment is 100% correct. You're missing the nuance of how commodity futures trading works. Yes most are cash-settled but there is a date after which if you hold the contract you're promising to make or accept physical delivery. The commenter is saying we reach that point for the May oil contract tomorrow so anyone who wants to settle in cash has to do so…

True, but there will be checking to ensure that you want oil if you are not normally a destination for oil. Trying to deliver oil to someone without a loading dock will be a problem that hurts many people trying to correct.

100% false. Where are these facts coming from?

The specs for delivery are always very clear because price depends on where it needs to be delivered!

"Delivery shall be made free-on-board ("F.O.B.") at any pipeline or storage facility in Cushing, Oklahoma with pipeline access to Enterprise, Cushing storage or Enbridge, Cushing storage."

What does it mean to be "normally not a destination for oil" and who is doing this checking (do you realize the volume of oil that is traded monthly? The futures market being discussed here uses standardized contracts.

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

#197

Post by chasd00 »

lonelappde wrote: post #45
fmajid wrote: post #33

Earlier quoted context omitted.

The gold bars are already in the US, as part of the Nixon-Faisal agreements. That should not be a comfort to the Saud kleptocracy, as the Shah of Iran discovered.

Does the Saudi kleptocracy have any reason to distrust the US klpetocracy? After 9/11/2001 the US was quite loyal in a difficulty time.

Without a stable government in SA the Middle East would be even more chaotic than it is now. I think that's why after 9/11 a priority was made to keep the SA monarchy stable and in power.

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

#198

Post by [deleted] »

missedthecue wrote: post #126
frankchn wrote: post #110

Earlier quoted context omitted.

The CME Crude Oil Futures Contract is settled through delivery at Cushing, OK: https://www.cmegroup.com/trading/energy/crude-oil/light-swee...

Yes, but a very very low percentage of the contracts that expire result in delivery. Delivery is expensive. It's cheaper to get oil through a supplier.

[deleted]
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