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Oil price is not negative.
One financial product on oil that is about to end is going negative for technical reasons.
The next contract is still about $22s. That is low, but very much positive
People are learning about the absurdity of financial markets & financial futures
One financial product on oil that is about to end is going negative for technical reasons.
The next contract is still about $22s. That is low, but very much positive
People are learning about the absurdity of financial markets & financial futures
Yes you can buy oil at negative price right now if you have a trading account at the CME (Chicago Mercantile Exchange) and can take delivery of the oil at Cushing Oklahoma at exact times
For those curious. Here are the details on how to take delivery of your negative priced oil
For those curious. Here are the details on how to take delivery of your negative priced oil
This old article by @tracyalloway is helpful for those wanting to do a deeper dive https://www.bloomberg.com/news/articles/2015-11-03/that-time-i-tried-to-buy-some-crude-oil
Oil futures are used to bet on future price of oil
There are contracts that end each month & one of them is ending tomorrow
Most people who trade them don't let them end. They are not interested in buying or selling oil, but use them to "hedge" future costs (like airlines)
There are contracts that end each month & one of them is ending tomorrow
Most people who trade them don't let them end. They are not interested in buying or selling oil, but use them to "hedge" future costs (like airlines)
So they "roll" them forward. If they own one ending tomorrow, they sell it & buy next contract for next month. In this case that means selling May & buying June
Usually they find someone wanting to do opposite!
Today that isn't happening, so cost for that roll is going crazy
Usually they find someone wanting to do opposite!
Today that isn't happening, so cost for that roll is going crazy
But lots of the people trading this don't every touch physical oil. They are just middlemen (& women) who trade stuff
And they smell blood & so they are playing games. Squeezing those desperate to roll who are not in a position to actually physically buy oil delivered in Cushing
And they smell blood & so they are playing games. Squeezing those desperate to roll who are not in a position to actually physically buy oil delivered in Cushing
Also, world is flooded in too much oil & so there is no place to store it. Those big tanks are full!
So even if you had a CME account & all the right paperwork & certificates necessary to take delivery in Cushing Oklahoma. It would be hard to store it!
Which is hurting the roll
So even if you had a CME account & all the right paperwork & certificates necessary to take delivery in Cushing Oklahoma. It would be hard to store it!
Which is hurting the roll
All of this is saying that Oil prices have fallen fast because demand for oil has collapsed (quarantine!) while supply hasn't
Too many countries & companies are still desperately pumping oil because they need the cash. That might change.
But, Physical Oil is not negative!
Yet
Too many countries & companies are still desperately pumping oil because they need the cash. That might change.
But, Physical Oil is not negative!
Yet
