Oil Futures

[89th]

I don't really understand oil futures. Maybe I'm the only one.

[89th]

I mean, I've google'd but still... what a different world to do business in.

[George K]

One dollar.

One.

[Improviso]

It just hit 10 cents a barrel.

[Improviso]

Negative : -1.43 a barrel. Unbelievable.

[Improviso]

At this rate, they are going to pay us to fill up our cars.

[89th]

Sooooo........should I buy Halliburton?

Is this just reflecting the surplus in supply, minimal demand, and no place to store the actual dinosaur juice?

[jon-nyc]

@jon-nyc said in Oil Futures:

May futures expire tomorrow. If you're long you gotta accept delivery. There's no where to store it. In theory it could go negative.

And it did!

https://www.barrons.com/articles/oil-futures-fall-below-1-for-first-time-ever-51587406408

[xenon]

@89th said in Oil Futures:

I don't really understand oil futures. Maybe I'm the only one.

There's a lot of implications and math that falls out from the basic structure. But the basic structure is quite simple:

The spot price is the price of a commodity today.

The futures price is the price of a commodity at a specific point in the future.

The futures price includes the cost of carrying and storing the commodity until the "delivery date".

Those two prices converge as the future date gets closer to today (spot price)

In this case, storage in May is expected to be full - which significantly increases storage and carrying costs. This makes the commodity itself quite unattractive and is the reason why we're seeing next to zero or even negative prices.

At this point full storage isn't priced into later months (July, August, etc.) - so those prices are still positive.

[Improviso]

@jon-nyc At this rate, I could store 310 barrels in my pool and they would pay me $9500 to do it.

[Loki]

@jon-nyc said in Oil Futures:

@jon-nyc said in Oil Futures:

May futures expire tomorrow. If you're long you gotta accept delivery. There's no where to store it. In theory it could go negative.

And it did!

https://www.barrons.com/articles/oil-futures-fall-below-1-for-first-time-ever-51587406408

Hey, I asked earlier how much could we charge to store it.

[Doctor Phibes]

@Jolly said in Oil Futures:

@Doctor-Phibes said in Oil Futures:

Oh, that's really not good for anybody working in the petrochem industry.

Hurts us, fer shur.

Hurts here, too. At least half our business is with people servicing the oil industry.

[Axtremus]

@Jolly said in Oil Futures:

Hurts us, fer shur.

Will hurt Russia even more, and just about any regime whose oil export represents a big fraction of national income.

[Mik]

Those two picked a bad time to make a glut, that’s for sure.

[Copper]

So anyone with a significant interest in oil will certainly become an ally of the ReOpen people.

Lots of new alliances will be made.

[jon-nyc]

I wonder how many systems are breaking right now on that negative number.

[George K]

@jon-nyc said in Oil Futures:

I wonder how many systems are breaking right now on that negative number.

::insert "You divided by zero" meme here::

[jon-nyc]

Seen on twitter

BREAKING - DUE TO THE RAPID CAPITULATION IN MAY 2020 OIL CONTRACT, OIL WILL NO LONGER BE QUOTED IN VOLUMES OF EXPENSIVE STEEL BARRELS BUT IN 42 GALLON GARBAGE BAGS

[Loki]

Of all ironies as the last cruise ship gets a port, supertankers take their place floating aimlessly in the ocean.

Who could have written that script 3 months ago?

[89th]

USO (an oil ETF) is down 33% today, as of right now, at least.