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From what I hear from the shale side it's an all-out panic right now. Lots of shutdowns and probably bankruptcies abound this year.
Sounds like the "magic bullet" shale was hoping for is for tariffs to be placed on Saudi oil. A straight bailout is probably not coming and the US isn't very good at signing on to production cuts a la OPEC. I expect things to just slowly descend into disaster for them from here.
The low is now 5$. It's not going well ! Hopefully it rebounds at least a little
edit : sorry. 2.5.
Well it's clearly not going to hold that low forever. Sooner or later supply is going to plummet, some large number of oil producers (hopefully most of the shale market) will go bankrupt and shut down production, and demand will either bounce back or rebalance at a new normal (probably $50 or so with some reduced capacity).
These prices clearly won't hold for long, but hopefully long enough to put some shale out of business!
Edit: And for all practical purposes, prices have reached 0. Nice.
Futures on a big negative... I highly doubt that is a realistic pricing.
Though I understand it means there is such a big surplus that delivery can't be taken. Thus they want to pay people to get it somewhere else instead of getting sued for failure to receive delivery. Or something similar, I don't really understand this sphere.
The futures contract is a contract that if you sell, you are guaranteeing that you will supply X product at the specified time in the future. If you buy, you are taking delivery on X product at that specified time in the future.
An oil producer will sell a contract and then take the oil out of the ground to fulfill it. There are end users that use oil to make other products who will buy contracts. Those two parties are using the futures contracts as intended and if the market only contained those two types of parties, this would never happen to oil.
However, there are also speculators. Speculators never intend to take delivery or make delivery on oil (or whatever other product the futures contract specifies). They always intend to sell off any contract they buy before expiration or buy contracts to cover their sells before expiration. On the positive side, they become middlemen who provide a counter-party when an actual buyer/seller wants to buy and they keep the market "liquid" (an oil producer doesn't need to wait around for an oil user to need oil, they can sell to the speculator and let the speculator find the oil user in the future).
What likely happened in this case is that oil producers outproduced demand (partially because of international politics and partially because of the corona virus slowing the need for oil users). However, speculators did not read the signs properly and bought oil as it dropped (must be a bargain at $20/barrel when it used to be $150/barrel!). It's those speculators that are on the hook right now.
It's shocking that a commodity actually hit negative, but that's where we're at. The speculators are literally paying people to take delivery for them because it's still cheaper than building the facilities to house the oil. If you happen to own a place to store a large amount of oil, here's your chance to get paid to fill it up.
edit: as someone who knows a bit about futures, I never did consider the fact that a commodity could go negative before this. I always looked at a commodity going to 0 as max loss. It's pretty wild to think that people will actually pay other people to take their commodity, but here we are. Glad I haven't done any oil speculating in years... this one could be serious trouble for a lot of prop firms.
From what I hear from the shale side it's an all-out panic right now. Lots of shutdowns and probably bankruptcies abound this year.
Sounds like the "magic bullet" shale was hoping for is for tariffs to be placed on Saudi oil. A straight bailout is probably not coming and the US isn't very good at signing on to production cuts a la OPEC. I expect things to just slowly descend into disaster for them from here.
The low is now 5$. It's not going well ! Hopefully it rebounds at least a little
edit : sorry. 2.5.
Well it's clearly not going to hold that low forever. Sooner or later supply is going to plummet, some large number of oil producers (hopefully most of the shale market) will go bankrupt and shut down production, and demand will either bounce back or rebalance at a new normal (probably $50 or so with some reduced capacity).
These prices clearly won't hold for long, but hopefully long enough to put some shale out of business!
Edit: And for all practical purposes, prices have reached 0. Nice.
Futures on a big negative... I highly doubt that is a realistic pricing.
Though I understand it means there is such a big surplus that delivery can't be taken. Thus they want to pay people to get it somewhere else instead of getting sued for failure to receive delivery. Or something similar, I don't really understand this sphere.
The pricing is realistic, it's like you're a landlord taking payment (sorry, renouncing on payment) in advance for future tenants. Then they don't pay as much as you expected and you'd have to pay others to take them because that's more profitable than keeping them in. Actually that's a super bad example. This article explains it better:
If you've got an empty garage, you could take delivery of a few barrels of oil and get paid for keeping it there. What'd happen if oil started to pay off more than an average rent?
tl;dr: If you speculated with NYMEX WTI a truck will come and dump barrels of crude on your front lawn. I can't stop laughing at that absurdity sorry.
From what I hear from the shale side it's an all-out panic right now. Lots of shutdowns and probably bankruptcies abound this year.
Sounds like the "magic bullet" shale was hoping for is for tariffs to be placed on Saudi oil. A straight bailout is probably not coming and the US isn't very good at signing on to production cuts a la OPEC. I expect things to just slowly descend into disaster for them from here.
The low is now 5$. It's not going well ! Hopefully it rebounds at least a little
edit : sorry. 2.5.
Well it's clearly not going to hold that low forever. Sooner or later supply is going to plummet, some large number of oil producers (hopefully most of the shale market) will go bankrupt and shut down production, and demand will either bounce back or rebalance at a new normal (probably $50 or so with some reduced capacity).
These prices clearly won't hold for long, but hopefully long enough to put some shale out of business!
Edit: And for all practical purposes, prices have reached 0. Nice.
Futures on a big negative... I highly doubt that is a realistic pricing.
Though I understand it means there is such a big surplus that delivery can't be taken. Thus they want to pay people to get it somewhere else instead of getting sued for failure to receive delivery. Or something similar, I don't really understand this sphere.
The pricing is realistic, it's like you're a landlord taking payment in advance for future tenants. Then they don't pay as much as you expected and you'd have to pay others to take them because that's more profitable than keeping them in.
If you've got an empty garage, you could take delivery of a few barrels of oil and get paid for keeping it there. What'd happen if oil started to pay off more than an average rent?
Also, this negative value was only for the contract expiring in May 2020. June 2020 contracts are still in the positive with 20.19 as a low.
Most oil producers are selling contracts long in advance where even the Low is upper $30s per barrel. So I'm not so sure that oil producers are actually going to take it so hard from all of this. The vast majority of pain should be on the speculators and that's the way this is supposed to work... until the government bails out the speculators.
From what I hear from the shale side it's an all-out panic right now. Lots of shutdowns and probably bankruptcies abound this year.
Sounds like the "magic bullet" shale was hoping for is for tariffs to be placed on Saudi oil. A straight bailout is probably not coming and the US isn't very good at signing on to production cuts a la OPEC. I expect things to just slowly descend into disaster for them from here.
The low is now 5$. It's not going well ! Hopefully it rebounds at least a little
edit : sorry. 2.5.
Well it's clearly not going to hold that low forever. Sooner or later supply is going to plummet, some large number of oil producers (hopefully most of the shale market) will go bankrupt and shut down production, and demand will either bounce back or rebalance at a new normal (probably $50 or so with some reduced capacity).
These prices clearly won't hold for long, but hopefully long enough to put some shale out of business!
Edit: And for all practical purposes, prices have reached 0. Nice.
Futures on a big negative... I highly doubt that is a realistic pricing.
Though I understand it means there is such a big surplus that delivery can't be taken. Thus they want to pay people to get it somewhere else instead of getting sued for failure to receive delivery. Or something similar, I don't really understand this sphere.
The pricing is realistic, it's like you're a landlord taking payment in advance for future tenants. Then they don't pay as much as you expected and you'd have to pay others to take them because that's more profitable than keeping them in.
If you've got an empty garage, you could take delivery of a few barrels of oil and get paid for keeping it there. What'd happen if oil started to pay off more than an average rent?
Also, this negative value was only for the contract expiring in May 2020. June 2020 contracts are still in the positive with 20.19 as a low.
Most oil producers are selling contracts long in advance where even the Low is upper $30s per barrel. So I'm not so sure that oil producers are actually going to take it so hard from all of this. The vast majority of pain should be on the speculators and that's the way this is supposed to work... until the government bails out the speculators.
This is an all-out price war for control over the energy sector. Even if oil producers that produce at higher costs than Russia and the middle east get bailed out, they'll have a hard time peddling their goods, and storage already ran out.
Futures are a way of storing it on paper, but the financial parties involved are now sitting on a mountain of trouble. We'll see what kind of damage this does within the next weeks, but it's historical.
On April 21 2020 02:10 Starlightsun wrote: Surprised to see protests against quarantine restrictions in my state. In the brief interviews on the news the protesters are saying basically "the state is taking away our rights!" I'm assuming they mean their right to go around and behave as if there isn't currently a pandemic. How would you guys respond to their argument?
I've overheard people comparing the stay at home order to house arrest.
From what I hear from the shale side it's an all-out panic right now. Lots of shutdowns and probably bankruptcies abound this year.
Sounds like the "magic bullet" shale was hoping for is for tariffs to be placed on Saudi oil. A straight bailout is probably not coming and the US isn't very good at signing on to production cuts a la OPEC. I expect things to just slowly descend into disaster for them from here.
The low is now 5$. It's not going well ! Hopefully it rebounds at least a little
edit : sorry. 2.5.
Well it's clearly not going to hold that low forever. Sooner or later supply is going to plummet, some large number of oil producers (hopefully most of the shale market) will go bankrupt and shut down production, and demand will either bounce back or rebalance at a new normal (probably $50 or so with some reduced capacity).
These prices clearly won't hold for long, but hopefully long enough to put some shale out of business!
Edit: And for all practical purposes, prices have reached 0. Nice.
How the fuck is the price of oil "negative" right now. Sign me up for buying some barrels of oil and being given a cash handout for it.
From what I hear from the shale side it's an all-out panic right now. Lots of shutdowns and probably bankruptcies abound this year.
Sounds like the "magic bullet" shale was hoping for is for tariffs to be placed on Saudi oil. A straight bailout is probably not coming and the US isn't very good at signing on to production cuts a la OPEC. I expect things to just slowly descend into disaster for them from here.
The low is now 5$. It's not going well ! Hopefully it rebounds at least a little
edit : sorry. 2.5.
Well it's clearly not going to hold that low forever. Sooner or later supply is going to plummet, some large number of oil producers (hopefully most of the shale market) will go bankrupt and shut down production, and demand will either bounce back or rebalance at a new normal (probably $50 or so with some reduced capacity).
These prices clearly won't hold for long, but hopefully long enough to put some shale out of business!
Edit: And for all practical purposes, prices have reached 0. Nice.
How the fuck is the price of oil "negative" right now. Sign me up for buying some barrels of oil and being given a cash handout for it.
You need to have the space and the permits to house at least 1000 barrels of it.
From what I hear from the shale side it's an all-out panic right now. Lots of shutdowns and probably bankruptcies abound this year.
Sounds like the "magic bullet" shale was hoping for is for tariffs to be placed on Saudi oil. A straight bailout is probably not coming and the US isn't very good at signing on to production cuts a la OPEC. I expect things to just slowly descend into disaster for them from here.
The low is now 5$. It's not going well ! Hopefully it rebounds at least a little
edit : sorry. 2.5.
Well it's clearly not going to hold that low forever. Sooner or later supply is going to plummet, some large number of oil producers (hopefully most of the shale market) will go bankrupt and shut down production, and demand will either bounce back or rebalance at a new normal (probably $50 or so with some reduced capacity).
These prices clearly won't hold for long, but hopefully long enough to put some shale out of business!
Edit: And for all practical purposes, prices have reached 0. Nice.
How the fuck is the price of oil "negative" right now. Sign me up for buying some barrels of oil and being given a cash handout for it.
Basically, people buy the ability to have this much oil in x number of days and sell that contract off before delivery. But since usage has plummeted, there are now contracts to buy oil that are coming due, but nowhere to put the oil physically. Reserves are full, oil tankers are full etc. People are paying you to get the oil out of their hands because they probably have to eat fees on top of the price for every day they can't take delivery.
From what I hear from the shale side it's an all-out panic right now. Lots of shutdowns and probably bankruptcies abound this year.
Sounds like the "magic bullet" shale was hoping for is for tariffs to be placed on Saudi oil. A straight bailout is probably not coming and the US isn't very good at signing on to production cuts a la OPEC. I expect things to just slowly descend into disaster for them from here.
The low is now 5$. It's not going well ! Hopefully it rebounds at least a little
edit : sorry. 2.5.
Well it's clearly not going to hold that low forever. Sooner or later supply is going to plummet, some large number of oil producers (hopefully most of the shale market) will go bankrupt and shut down production, and demand will either bounce back or rebalance at a new normal (probably $50 or so with some reduced capacity).
These prices clearly won't hold for long, but hopefully long enough to put some shale out of business!
Edit: And for all practical purposes, prices have reached 0. Nice.
How the fuck is the price of oil "negative" right now. Sign me up for buying some barrels of oil and being given a cash handout for it.
You need to have the space and the permits to house at least 1000 barrels of it.
Do you need the permits with Trump waiving a bunch of regulations?
Trump's campaign has been putting out ads lately and this one juxtaposing hungry/jobless Americans with Pelosi showing off her ice cream is going to hurt Democrats.
This one calling attention to how creepy/weird Biden is with referential humor I'm less sure will resonate with voters.
On April 21 2020 11:58 GreenHorizons wrote: This one calling attention to how creepy/weird Biden is with referential humor I'm less sure will resonate with voters.
It's got 12 million views within 12 hours and he's pinned it.Those clips were from the same Biden talk where he brought up corn pop, 20 minutes pure rambling.Odd comments for sure and questions need to be asked about Bidens suitability and mental fitness for president.On CNN the other day he struggled reading off a set of notes
The Trump v Biden debates will be something else, looking forward to them.
On April 21 2020 07:16 Simberto wrote: Is that actually happening anywhere else but in the US?
From my experience here, people view the isolation as annoying, but necessary.
Protests are happening in Canada, Brazil and Spain too.
Even fucking Khaldor has been outspoken against the quarantines on Twitter.
It definitely isn't isolated to just the United States.
It's bound to happen more as people get increasingly tired of being isolated. At some point, they'll just not care anymore, as they cannot see the danger happening first-hand. And this is the vector I can see the virus lingering on in far higher numbers than it'd have needed to, causing much more death.
I'd be all for allowing people to gather in groups, as long as any gathering required a signed agreement to only socialize with other signees until the end of the lockdown, and that in the case of infection, said people would be last in the queue for treatment.
Either they'd show us all they were right and the danger's low, or they'd win their so-deseperately-sought-for darwin award.
EPT
