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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

#501

Post by symplee »

patall wrote: post #458
typon wrote: post #295

Earlier quoted context omitted.

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

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?

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

#502

Post by kens »

WJW wrote: post #347
colinmhayes wrote: post #317

Earlier quoted context omitted.

I've never been to Cushing Oklahoma. I feel like it should be possible to build a big tank in a week or two. Why isn't available storage space skyrocketing?

There is a little bit more to an oil tank than just steel walls. You need proper foundations, fire prevention systems, disaster plans, probably get hooked up to the pipeline network, etc etc etc. Even if it were quick, the amount of oil being pumped up is massive and you need more than a few tanks to store it all. Finally, tanks are long term infrastructure and it might not be profitable to build out storage too much…

Speaking of oil tank fire prevention, videos of foam fire suppression systems are pretty impressive. A gasoline tank fire goes from massive flames billowing into the sky to totally extinguished in 40 seconds. For example: https://youtu.be/OxLPvNdv2t4?t=210

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

#503

Post by henrikschroder »

ptero wrote: post #57
harikb wrote: post #24

Earlier quoted context omitted.

Dictators/Kings can survive on a very tight budget btw. It takes a long long time for those structures to crack. The only reason they would leave town would be something related to the virus (like other western rich folks are doing now)

Survive in a small enclave in a third country with a small group of servants, sure. Survive as dictators, I am not so sure -- it requires keeping troops and those in key positions happy, which is expensive. My 2c

Rules for Rulers by CGP Grey is a fantastic lesson in how this works: https://www.youtube.com/watch?v=rStL7niR7gs

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

#504

Post by oldsklgdfth »

hermitdev wrote: post #489
yingw787 wrote: post #422

Earlier quoted context omitted.

I never understood why as a company you wouldn't prefer an on-premises computer cluster with some overhead and give employees thin clients, rather than give everybody MacBook Pros. Thin clients + servers make much more sense to me from a business perspective. They seem much easier to secure (just revoke some keys if you need to fire somebody), much easier to give everybody a reproducible dev env and avoid a lot of sh…

I worked for a financial company that ran a private cloud. They provided everyone with beefy workstations (16 physical cores, 32 GB of RAM). 3/4 of those resources were allocated to a VM that ran a custom compute platform that took jobs off of a queue. The explanation was simple. it was easier/cheaper to leverage the workstations than it was to build out the same compute in the datacenter. Granted, there was about a…

That's pretty cool. Sounds to me like a corporate SETI@home.

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

#505

Post by Mikeb85 »

chrisfinazzo wrote: post #359
Mikeb85 wrote: post #112

Earlier quoted context omitted.

Yeah gas prices mostly correlate to oil prices but also to demand for gasoline (hence the price always going up in the summer).

I meant this more in the sense of do they look at a specific benchmark to derive how prices are set. E.g, If gas is based on WTI, then Brent can be up or down without affecting it much - Prepared to be wrong. While they aren't in lockstep, it looks like they play off each other most of the time. As you say, seasonality has a role and demand for heating oil v gas depends on the time of the year.

Gasoline is one of many products produced from crude (others include kerosene, diesel, heating oil, butane, propane, plastics, etc...). You can also get a different mix of products depending on the grade of oil and refining technique, so gasoline has its own supply/demand dynamics which partially intersects with demand curves for the other products while crude is merely the input.

So cheap crude does allow more room to lower the price of gasoline and cheap crude is often linked to lower demand, however they're not in lockstep due to the many other factors.

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

#507

Post by [deleted] »

lalaithion wrote: post #288
refurb wrote: post #279

Earlier quoted context omitted.

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.

But then the price in June should also be down.

[deleted]

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

#508

Post by Digory »

kietdlam wrote: post #237
tempsy wrote: post #220

Earlier quoted context omitted.

Most oil traders don’t actually want physical delivery. They are just trying to profit off price movements. Traders have moved on to June contracts already. There’s no volume on May contracts at this point. No one wants to actually pay for physical delivery so the price is tanking since there are no bids as we get closer to expiration tomorrow.

You still haven't answered the question...

-$37.00 is a distress price, just for the unwitting investors who agreed to play “Hot Potato: Bloodsport.”

By definition, you’re looking at the price for people who wouldn’t want to play, if they could avoid playing. They are literally over a barrel. If they don’t get out, the broker gets to screw them even worse at the deadline.

Volume was up, because some people were going through heroics to close their position at all costs.

But the end of day price is for those who got screwed: the truly unaware who didn’t realize they were out of time, or didn’t think about it going past $0. It’s probably relatively few people, despite today’s volume. When you lose control, someone agrees for you that you’ll pay $37/bb to get out.

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

#509

Post by kccqzy »

alkonaut wrote: post #365
cwhiz wrote: post #351

Earlier quoted context omitted.

The May contract was still selling at $22 as of last Tuesday. I don't know much about oil markets but my base assumption would be that we would do this whole thing over again in 30 days unless something significant happens in consumption or production? When do the output cuts begin?

And can I somehow short these contracts a week before the next deadline?

If the same thing did happen again a month from now, you'd surely make a lot of profit. But it might not, and that's the risk.

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

#510

Post by kccqzy »

typon wrote: post #295
symplee wrote: post #290

Earlier quoted context omitted.

Now trading at -$37.00. That's right. Negative thirty seven dollars. Today: -54.67, -299.23%. https://www.marketwatch.com/investing/future/crude%20oil%20-...

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

Certainly broke the native stocks app on iOS. The graph only goes to zero, and the blue dot indicating the current price was rendered below the graph, in the news story section.
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