OT: Oil goes negative

[tsarpepe]

After a 300% plunge, crude oil futures are now trading below zero.
Does this mean that they'll be paying me to fill up at the gas station?

[AngryScientist]

After a 300% plunge, crude oil futures are now trading below zero.
Does this mean that they'll be paying me to fill up at the gas station?

i know you're just joking, but there is a lot that has to happen between crude and filling up at the pump.

this is a religion, science and magic for some people, so i wont speculate as i'm not an expert, but i could see this driving the price of gasoline up, as refineries, shippers, pipeline operators, etc halt operations due to the low low price.

[Ken Robb]

"FREE" plus shipping and handling. :)

[mtechnica]

The price of oil is like a ham sandwich. If the ham becomes free you still have to pay for the bread and cheese, know what I’m sayin?

[dbnm]

https://www.cnn.com/2020/04/20/world/deepwater-horizon-spill-anniversary-fish-study-scn/index.html

[Mikej]

It’s the taxes that kill a good ham sandwich

[skitlets]

Sounds like it'd cost less to pay someone to take the oil than to pay for storage.

[FlashUNC]

The latest episode on "When Commodities Get Weird."

[el cheapo]

Boom & Bust. Everybody who has anything to do with the oil industry knows this is going to happen. It's economics 101...supply & demand. When the boom is on you better save your money because a bust is around the corner.

[unterhausen]

I was wondering if it would affect pump prices. The world's capacity to store oil is nearly full and the refiners aren't buying. So the people that hold these contracts need to find a place to store the oil involved or pay someone enough that they will be motivated to find someplace to store the oil. People are renting ships to store oil.

The next round of futures contracts are in the $20 range.

[el cheapo]

Breaking news! U.S. Government going to buy up all May W.T.I. oil contracts and create world's largest slip & slide. Prez say's it's going to be gigantic enormous...bigly!

[wc1934]

"FREE" plus shipping and handling. :)

But wait - if you act now you'll receive...........

[zmudshark]

.

[robt57]

I don't recall in my lifetime futures trading lower than current PPB.
Has that happened before? Not sure I am thinking or saying that right.. ;)

Rhetorical question anyway I suppose...

[djg21]

i know you're just joking, but there is a lot that has to happen between crude and filling up at the pump.

this is a religion, science and magic for some people, so i wont speculate as i'm not an expert, but i could see this driving the price of gasoline up, as refineries, shippers, pipeline operators, etc halt operations due to the low low price.

“Benchmark US oil prices crashed into negative territory for the first time in history as the evaporation of demand caused by the coronavirus pandemic has left the world awash with oil and not enough storage capacity - meaning producers are paying buyers to take it off their hands.”

https://www.irishtimes.com/business/energy-and-resources/us-oil-price-goes-below-zero-for-first-time-in-history-1.4233131

More: https://www.bbc.com/news/business-52350082

[notsew]

Lotta these kinds of firsts lately.



“Benchmark US oil prices crashed into negative territory for the first time in history as the evaporation of demand caused by the coronavirus pandemic has left the world awash with oil and not enough storage capacity - meaning producers are paying buyers to take it off their hands.”

https://www.irishtimes.com/business/energy-and-resources/us-oil-price-goes-below-zero-for-first-time-in-history-1.4233131

More: https://www.bbc.com/news/business-52350082

[MikeD]

i know you're just joking, but there is a lot that has to happen between crude and filling up at the pump.



this is a religion, science and magic for some people, so i wont speculate as i'm not an expert, but i could see this driving the price of gasoline up, as refineries, shippers, pipeline operators, etc halt operations due to the low low price.


They just closed a refinery in the SF Bay Area, and gas here is still not cheap at around $2.80/gallon.

[djg21]

They just closed a refinery in the SF Bay Area, and gas here is still not cheap at around $2.80/gallon.

Gas is still relatively expensive here too. About $2.70/gal regular (unfortunately I need to use high test). My sense is that gasoline companies always maximize profits by delaying price reductions as long as possible, and retailers tend not to change prices on supplies that they already have on hand, and for which they paid higher wholesale prices.

[cmg]

it's $1.41 in SA. Suppose to be going down at the end of the week.

[kppolich]

$0.98 here in Milwaukee, WI

[Clean39T]

...

[robt57]

Guess now's not the time to put my 2020 Prius Prime up for sale....

Sent from my Pixel 2 XL using Tapatalk

A friend just gave us his Pruis to give to my Kid up in Spokane.
Kid flew down and got fair MPG on the long trip back, and getting 50-60MPG around town once home...

Was replaced with a All_Elec Bolt, cost more to charge than the gas for my CRV at this point..

My CRV is getting 100 MPG moving it in and out of the driveway...

My other kid needs a free car too Dan. ;)

[parris]

The kicker in my area is that gas is STILL around $2.30ish a gallon! Just over the boarder in PA it's in the mid $1.50 range and in the next county over it's just under $2.00. The local companies and stations are V E R Y slow in dropping their prices BUT when the price of crude jumps they'll raise the prices 2 or 3 times in the space of a day.

[godfrey1112000]

Some guy stopped me while I was riding and want to pay me $20 a barrel to take delivery on 10million barrels I knew something was up:eek:

[buddybikes]

Guess now's not the time to put my 2020 Prius Prime up for sale....

Sent from my Pixel 2 XL using Tapatalk

Busy looking for a Prius Prime for our daughter, just like the car and know in few years things will turn around. Lots available here in New England, major rebates (3,500+) but almost zip where she lives in Nashville as Toyota doesn't supply hybrids in TN very much.

[Ralph]

Might be a good time to top off the Strategic Petroleum Reserve.

[Clean39T]

...

[tctyres]

Might be a good time to top off the Strategic Petroleum Reserve.

Trump already said he was doing this a few weeks ago.

[tsarpepe]

Trump already said he was doing this a few weeks ago.

Those tanks are full too.

[Ralph]

He didn't get the money from Congress to do it. The Fed is leasing some storage space to some oil companies. Maybe Congress will take another look. it would be smart to top off the storage at low prices...and the next time the Saudi's or Russians run the price up....have some oil to dump on the market.

[HTupolev]

The kicker in my area is that gas is STILL around $2.30ish a gallon! Just over the boarder in PA it's in the mid $1.50 range and in the next county over it's just under $2.00. The local companies and stations are V E R Y slow in dropping their prices BUT when the price of crude jumps they'll raise the prices 2 or 3 times in the space of a day.
The drop is gasoline demand is because people are intentionally avoiding travel, and has little to do with price. If gas stations drop their prices, they won't magically start selling tons of gasoline, they'll just make less money on the gasoline they're selling.

[AngryScientist]

i'm considering throwing my trickle charger on my own car. i havent touched it in a month, and i dont see an end in sight to that trend.

[denapista]

Diesel fuel where I live (LA) is creeping up.. $3.60g

[mtechnica]

Who wants to go in on an oil tanker with me? We just need to get paid for the oil, wait a while, flip the oil, and get a free oil tanker. I don’t see any possible reason this wouldn’t work.

[AngryScientist]

Who wants to go in on an oil tanker with me? We just need to get paid for the oil, wait a while, flip the oil, and get a free oil tanker. I don’t see any possible reason this wouldn’t work.

my merchant marine license is still active, if you need someone to work the engine room :)

[glepore]

This is sorta not real news. Its May futures that became negative, because there's no storage capacity anywhere so futures are literally worthless-you can't take delivery of oil at the end of April with no where to put it. The real price of a an actual barrel is still around $20.

Nonetheless, I worry about what the Russians an Saudis will do in a month.

[cnighbor1]

Once on an organized ride when there was gut of oil I went past 100’s
Of old rail tankers Cars On old rail track s
I was
South of Olympic WA
At first I was amazed to see so many
Than I realized that they storing oil
Bet they are there again

[unterhausen]

This is sorta not real news. Its May futures that became negative, because there's no storage capacity anywhere so futures are literally worthless-you can't take delivery of oil at the end of April with no where to put it.
is there a penalty to letting the contract expire without taking delivery? Don't understand why they wouldn't let them lapse if there isn't. You realize the loss either way

[54ny77]

I'm sure it'll trickle down to the cost of consumer goods that utilize petroleum products.

Not.

[verticaldoug]

is there a penalty to letting the contract expire without taking delivery? Don't understand why they wouldn't let them lapse if there isn't. You realize the loss either way

It's not a penalty as much as an open ended liability. In a normal functioning market, if you were long futures contracts on expiry, you can assign the contract to the NYMEX to settle the physical delivery and they charge you the costs for that. (Normally only a few hundred dollars per contract) if memory serves me. But in this case, the actual cost of settling could be higher. I just think it happened so fast, traders could not coordinate the storage fast enough. I am sure overnight, the large traders will have leased tankers and will be buying front month and selling back month.

If you tried to walk away from your contract commitments, you are going to be sued and fined by multiple counter parties - NYMEX, CFTC, your broker. I suspect you are banned for life from the industry. Have you ever looked at the fine print on a brokerage account?

[Hank Scorpio]

I'm sure it'll trickle down to the cost of consumer goods that utilize petroleum products.

Not.

“It goes up like a rocket and comes down like a feather”

[oldpotatoe]

After a 300% plunge, crude oil futures are now trading below zero.
Does this mean that they'll be paying me to fill up at the gas station?

Nope but what it does do is take the more expensive and less profitable oil extraction companies out of the 'equation'..namely the higher cost oil extraction companies in Canada and the US...funny, I thought Putin and MBS were BFF with....ya know.

[verticaldoug]

Might be a good time to top off the Strategic Petroleum Reserve.

March 19th, President Trump said they would start buying for SPR in presser
March 26th, US Department of Energy withdrew the tender to buy oil for the SPR

Instead, the Department of Energy decided to lease space to Energy Companies so they could store oil. The tender for lease closed April 9th, April 14th 30mm barrels of storage space was leased out without disclosing details of contracts or leasing parties. I think the deliveries are set for June/July which means there is probably a lead time for SPR to be ready.

In theory, this leaves just 47mm barrels of storage open until full. I do not know if this has also been tendered.

[Davist]

Could be a good opportunity to pave what's needed and get some displaced folks back to work... Could be done within distancing guidelines as well, I'd bet. 22M+ unemployed by this reckoning (with perspective to previous events) https://www.visualcapitalist.com/charts-historic-u-s-job-losses-perspective/

[Clean39T]

...

[dbnm]

regular unleaded is $1.19 here in Albuquerque.

[unterhausen]

It's not a penalty as much as an open ended liability.
Thanks for the explanation

[Clean39T]

regular unleaded is $1.19 here in Albuquerque.

Still $2.80 in Portland.

Not that I'm buying much....