Global Financial Crisis (5 Viewers)

Bjerknes

Bjerknes

"Top Economist"
#1,583
Mar 16, 2004
111,513
#1,583
Shale companies are done. They're basically giving away barrels for free because there isn't any more storage. Going to be a lot more jobless claims coming unless somehow oil pivots and explodes higher. These moves are just insane.
 
ALC

ALC

Ohaulick
#1,585
Oct 28, 2010
45,997
#1,585
Bjerknes said:
Shale companies are done. They're basically giving away barrels for free because there isn't any more storage. Going to be a lot more jobless claims coming unless somehow oil pivots and explodes higher. These moves are just insane.
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they seem to be paying to get the oil out of their hands
 
duranfj

duranfj

Senior Member
#1,586
Jul 30, 2015
8,765
#1,586
Bjerknes said:
Shale companies are done. They're basically giving away barrels for free because there isn't any more storage. Going to be a lot more jobless claims coming unless somehow oil pivots and explodes higher. These moves are just insane.
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Oil keeps into this level, a lot of oil countries and companies are going down, any company based on new technologies and alternative fuels are next, after that the rest of the technology industry because noone is going to invest in anything, then a financial collapse and finally countries are going to create enemies to focus their frustration and after that you just need history book to see how it's going to end

So again, game over
 
Bjerknes

Bjerknes

"Top Economist"
#1,593
Mar 16, 2004
111,513
#1,593
:lol:

Keep in mind that the $-38 print is for the front month contract (May) that expires tomorrow. The forward months are still around $20/barrel, which makes this the biggest contango market I've ever seen. But the supply shock to the market is just amazing, never seen anything like this before where all the storage units are full and they are basically having to give it away.
 
GordoDeCentral

GordoDeCentral

Diez
Moderator
#1,595
Apr 14, 2005
69,336
#1,595
Good job Andy on explaining to the plebs why it's in the negative, simply put investors are just not interested in trading oil contracts for the next couple of months, understandably so. So producers are left with the option of paying people to take the oil coz they have nowhere to store it.
 
Bjerknes

Bjerknes

"Top Economist"
#1,597
Mar 16, 2004
111,513
#1,597
Producers are trying to store as much oil as they can, and the storage tankers are already filled to capacity. So the folks left holding the May contract into expiry tomorrow are taking physical delivery of oil with nowhere to put it. If you have nowhere to store the oil, and no demand in the commercial market to sell the oil quickly, then the only option left is to try to sell the contract into expiry. If nobody wants physical oil, then it makes total sense for the front month contract to go negative.

I'm not really sure how this contango will play out until demand comes back. Theoretically shale producers are out of business at this point, so I'd imagine wells are going offline now or sometime soon unless they're gambling on more storage being available where they can sell it at a profit for the June contract. If demand continues to fall, and folks are betting on the forward month contract still being $20, will the same thing happen again on the next contract expiry in the middle of May. I can't imagine this could happen two months in a row, but these markets are nothing short of insane, so anything is possible.

If the contango lasts for months there will be additional problems, including bank margins and even ETF's looking at losses when they have to rollover into the next month contract.

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GordoDeCentral said:
Good job Andy on explaining to the plebs why it's in the negative, simply put investors are just not interested in trading oil contracts for the next couple of months, understandably so. So producers are left with the option of paying people to take the oil coz they have nowhere to store it.
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New war or attacks coming? Can't have oil this low...
 
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Valerio.

Valerio.

Senior Member
#1,599
Jul 5, 2014
5,676
#1,599
https://www.foxbusiness.com/markets/oil-price-crashes-record-low

lol? how can it be -36.73 per barrel? basically paying other to get it from them

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Valerio. said:
https://www.foxbusiness.com/markets/oil-price-crashes-record-low
What's happening now is what happened in Trading Places when the real report comes out: people realized that they overpaid for their futures and are selling to try and recoup some of their losses. There's barely any demand for oil right now, there's little hope that there'll be more demand for oil in May, and there's very little storage space left already. Low demand + high supply = low prices. A few days ago, the settlement price for a barrel of oil for futures contracts with May settlement dates was locked at ~$18 a barrel. People expect it to be way lower than $18 next month. So, what they're doing is trying to sell off their futures contracts. It's going negative because they're literally paying you to take it off their hands if you have room for it. Although they know it'll be a loss, they figure it's less of a loss than holding onto a bunch of worthless oil that they can't store
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