https://www.zerohedge.com/commoditie...oldman-answers
May contract lowest was -$40... so you receives $40 per barrel of oil to keep it, drink it, or do whatever else you can with it.
https://www.zerohedge.com/commoditie...oldman-answers
May contract lowest was -$40... so you receives $40 per barrel of oil to keep it, drink it, or do whatever else you can with it.
So... random question.
How do you "buy" a negative value contract? Tell your broker give me 50,000,000 contracts at $-40?
Specifically this price drop was for US West Texas crude. Lots of other oil futures were in the positive.Original Post Deleted
What is unknown to me - what is this bit of WTI crude good for. Not all crude is usable for "everything"...
With all the bunkers full this is just a price reflective of the huge premium on storage which is proximate to where the oil is being produced. I presume it is more expensive or impossible to slow/stop the flow than it is to pay people to take the stuff away. It'll be interesting to see how long it takes for more storage capacity to become completely filled on other types and locations of oil production.
I guess it might even flow through to a fire sale (not literally hopefully) on petrol from storage into everyone's tanks. But hard for the companies to orchestrate mass fill ups while lockdowns are on.
Well apart from India, I suspect China and other countries are going crazy to take advantage of this "negative price" to stock up on strategic reserves, right?
Just to clarify, this does not mean oil is actually worse than worthless, its just the contract that has a negative value.
negative price only for WTI and its landlocked oil.. china/india doesn't buy oil from the states.. brend crude still trading at around 20USD last i remembered...
Delivery is a big concern.. you have to buy in Cushin or Oklahoma, and have it delivered to the place you want...
bear in mind May delivery notice period is likely the next 4 weeks or so, means you have to find the logistics to bring those 100k contracts of oil (each contract is 5000 barrel IIRC) from land to the sea, then off across pacific ocean back to your sweet home land.. where storage again can be an issue.
Definitely a fun project to undertake.. try it and let us know the result..
Anyway consider the fact that most storage at the two delivery spot are pretty much full, and consumption of gasoline over the next 2 months will be slow even though we are heading into summer, likely june contract will also be super volatile and push near to zero closer to expiry.