
Oil plunges below zero for first time with May contract ending - adventured
https://www.bloomberg.com/news/articles/2020-04-19/oil-drops-to-18-year-low-on-global-demand-crunch-storage-woes
======
frankchn
Note that this is for the May contract, which closes tomorrow, and anyone left
with a contract then will have to actually take delivery of the physical
product. Since we are in supercontango (oil storage is full, causing spot
prices to be significantly lower than forward prices), I am guessing that
traders who are still holding on to contracts and don’t have available storage
have to unload contracts pretty quickly.

The June contract, where most of the trading is happening, is at around $22,
and the July contract is $28.

~~~
jjallen
What I don't understand is why the sudden move today? Did the longs _think_
they had a place to put the oil on Friday but found out over the weekend they
had no place to put it? Just seems like you would know what to do with the oil
on Friday. Note this is not a rhetorical question, I would sincerely like an
answer.

~~~
lordnacho
> What I don't understand is why the sudden move today? Did the longs think
> they had a place to put the oil on Friday but found out over the weekend
> they had no place to put it? Just seems like you would know what to do with
> the oil on Friday. Note this is not a rhetorical question, I would sincerely
> like an answer.

Guys like myself, an ex fund manager, could be tourists in the oil market. I
know I was, speculating occasionally on oil without knowing a whole lot about
the details. Plenty of macro guys are similar, they bet on the large movements
as the opportunites present themselves and don't worry about the details.

So what has probably happened is some of these tourists have had a few
contracts left over that they forgot about or didn't discover in their
position keeping until their prime brokers phoned them, and they had to dump
into a market under very special conditions. Hopefully not very many
contracts.

In normal times if you screwed up and had to do delivery, it stil wouldn't be
a big problem, because the storage is available and you essentially just buy
it (by trading with a guy who actually knows how to organize it), costing
relatively little.

~~~
hermitdev
This reminds me of Brian Hunter [0] of Amaranth fame. He was on the wrong side
of a huge (multi billion USD) long trade on Natural Gas. When faced with
losing it all, he doubled down. Blew up Amaranth. $9B USD hedge fund blew up
basically overnight. Margin calls, etc, etc.

Disclaimer: I worked for the hedge fund at the time that bought Amaranth's
holdings for pennies on the dollar. Was supposed to be a joint buyout with JP
Morgan Chase, but Chase couldn't calculate the risk in time before closing and
left us with all of the eggs in the basket. We ended up making a killing on
the deal as we had the assets to weather the margin calls. I still can't
believe anyone gave B.H. any money to trade with after that, but someone
did...

[0]
[https://en.wikipedia.org/wiki/Brian_Hunter_(trader)](https://en.wikipedia.org/wiki/Brian_Hunter_\(trader\))

~~~
MR4D
One thing is clear to me - _somebody_ is getting fired this week. Not sure if
it's a hedge fund or producer, or a trader or a team, but _someone_ is getting
fired.

~~~
baggy_trough
Everyone is getting fired.

~~~
MR4D
Not likely. This could actually be one person/team who was out of balance on
their book.

Back in 2008 when oil hit $150, it was due to a single trader. Needless to
say, everyone in the industry was pissed at him afterwards.

~~~
baggy_trough
Everyone in the economy is getting fired.

------
nopinsight
If the pandemic lasts longer than 6 months, which is quite likely, many high-
cost oil producers might not survive. Some would argue this could lead to
shortage and a much higher price later on, but long-term oil demand could also
be affected.

There might be some semi-permanent change in people's behaviors if the
epidemic continues for many months. Many people will form a habit of doing
more things at home/online: more takeouts, more online shopping, live/recorded
video classes, virtual meetings, telehealth, etc. Better online services will
also spring up to support the habits/practices.

Since online activities often save time, the new habits could become a new
_equilibrium_ : people/companies who adopt them will often have an economic
advantage, influencing others to do the same. Thus, oil demand could be
significantly diminished long-term as well.

~~~
yingw787
If this comes to pass, I'm all for it. If we could take the demand we saw for
oil, and put it into demand for high-speed Internet, we could see completely
new, blue ocean markets.

Imagine a surgeon being able to control a robotic surgery tool from the
comforts of his/her home, where you have to have extremely low-latency or
guaranteed low-latency networks. Or imagine mecheng offices running simulation
jobs in the cloud or an on-premises instead of each having a workstation, and
being able to cluster that compute together. All these have been possible to
some degree with existing technology, but now we have a paradigm shift and
market acceptance that unlocks new business possibilities.

~~~
bluGill
Nice to imagine, but the speed of light is too slow for a lot of low latency
applications. After you allow the infrastructure some latency. A dedicated
line might work, but without the network that is expensive.

~~~
xoa
> _Nice to imagine, but the speed of light is too slow for a lot of low
> latency applications._

Is it? Looking around, it seems average visual reaction times (VRTs) are on
the order of 250 ms, and even the fastest VRTs are well over 100 ms. A study
looking specifically at medical students for auditory and visual reaction
times ( _" A comparative study of visual and auditory reaction times on the
basis of gender and physical activity levels of medical first year students"_
[1]) also seems to support those numbers in the medical context, and while
experienced surgeons could be expected to be somewhat faster that paper also
links to research indicating hard biological minimums:

> _" Researches by Kemp show that an auditory stimulus takes only 8–10 ms to
> reach the brain, but on the other hand, a visual stimulus takes 20-40 ms."_

If we want to be quite conservative and aim to keep latency to single digit
ms, so sub-10ms, then the speed of light in standard fiber gives us an RTT
limit of around 1300 miles. Going more conservative and assuming actual route
having to essentially follow the legs of a right triangle, that still gives a
radius of around 460 miles, with a set of reasonably conservative assumptions.
That seems plenty good enough to cover an enormous amount of work-from-home
(or at least work-from-different-location) when it comes to actual existing
medical practices, where I doubt most doctors at hospitals live >460 miles
away.

I would agree that there are real issues with the idea, but more in terms of
the risks events like network disruptions than the speed of light.

\----

1:
[https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4456887/](https://www.ncbi.nlm.nih.gov/pmc/articles/PMC4456887/)

~~~
hailwren
I think you've mixed up your logic a bit. A slow visual reaction time means
that surgeons are already reacting slower in the real world. Any latency added
(!!) by a network further adds to the delay between surgeon reaction and real
world stimulus.

You argued that when we compare the average VRT additional latency is not
large. But you should have argued that there was enough buffer between average
VRTs and the time needed for a surgeon to react to allow adding to average
VRT.

i.e. If we imagine driving a car with a video camera, we don't really care
about latency vs reaction time. We care whether latency + reaction < accident
threshold.

~~~
xoa
> _You argued that when we compare the average VRT additional latency is not
> large. But you should have argued that there was enough buffer between
> average VRTs and the time needed for a surgeon to react to allow adding to
> average VRT._

If you look at the paper I linked, it includes not just the mean but the
standard deviation, which is on the order of 10-20ms. That means we are
already by definition accepting that kind of variability regardless does it
not? If +/\- 10ms was critical, it'd imply we should be filtering for that
already but it doesn't appear that's the case at all. Furthermore, hunting
around for other research on the subject indicates far higher variability than
that is also introduced by standard stress factors (lack of sleep, overload,
distractions, etc). All of which are strongly present in existing medical
practice as well. To the extent working remotely might reduce some of those it
could in principle even effectively cancel out a 10ms penalty.

I stand by saying it's not at all clear that sub-10ms (or potentially even
higher) would at all be the critical factor preventing remote work. Speed of
light seems to be far less important then factors like total network
disruption, robotics reliability, etc.

------
joosters
Western Canadian oil was -$0.15 today, i.e. you can be paid to take oil from
the producers!

[https://twitter.com/zeroshorts/status/1252108066843054097](https://twitter.com/zeroshorts/status/1252108066843054097)

n.b. you'll still have to also pay the cost of piping the oil to somewhere
that might want it...

~~~
symplee
Now trading at -$37.00.

That's right. _Negative_ thirty seven dollars. Today: -54.67, -299.23%.

[https://www.marketwatch.com/investing/future/crude%20oil%20-...](https://www.marketwatch.com/investing/future/crude%20oil%20-%20electronic)

~~~
typon
I wonder if that negative int broke a bunch of code in software around the
world

~~~
grezql
Son I sure hope thats not an Int. Its double, float or something else

~~~
jetrink
To be doubly pedantic, it probably is an int in many places, to avoid rounding
errors.

~~~
koheripbal
Correct. In finance it is the norm to store all currency amounts as int.

~~~
mcv
Let's hope it's a signed int, then.

------
dsalzman
“ The upcoming May contract’s expiry means traders are shifting their
positions to June as they try to avoid taking deliveries of cargoes because of
the lack of space to store them. That has opened up an unprecedented discount
of more than $10 between the two nearest contracts.

This situation—in which the price of the June contract is far above that of
the May one—apparently delights in the name “super contango.” People put a
price on oil—they think it has value and want to own it at that value—but they
also put a price on not having it now, and the latter price is quite high
relative to the former. Conceivably, in theory, the latter price (what you’d
pay to not have oil now) could exceed the former (what you’d pay to have oil
eventually), leading to negative spot prices. We’re getting there:

There are signs of weakness everywhere. Buyers in Texas are offering as little
as $2 a barrel for some oil streams, raising the possibility that producers
may soon have to pay to have crude taken off their hands.

In ordinary economics, things do not have negative prices: If nobody wants a
thing, if you’d have to pay them to take the thing, you just don’t make it.
Oil is a little weird—it is hard to shut in and then restart an oil well, and
there are all sorts of weird cartels and game theory involved in oil pricing
and production—but the other thing going on here is that a global pandemic is
pretty weird for commodity prices. The price of oil is not approaching zero
because nobody needs oil; you can look into the future—or at futures
prices—and see that, in fact, there is demand for oil. But right now, with the
world economy closed, people need much less oil than they’ve got. If you have
a thing that lots of people want, but that no one wants right now, it is hard
to put a normal price on it.” today’s money stuff newsletter by Matt Levine

[https://www.bloomberg.com/amp/opinion/articles/2020-04-20/th...](https://www.bloomberg.com/amp/opinion/articles/2020-04-20/there-
s-nowhere-to-put-the-oil)?

~~~
jb775
> In ordinary economics, things do not have negative prices: If nobody wants a
> thing, if you’d have to pay them to take the thing, you just don’t make it.
> Oil is a little weird—it is hard to shut in and then restart an oil well

They could always just burn the oil.

~~~
akiselev
How would they do that? Power plants and generators need a load, cars and
other transport needs somewhere to go and something to carry, and other
infrastructure to burn fuel at any sort of scale just doesn't really exist
except at the wells themselves. Flaring infrastructure was designed to burn
large amounts of unprofitable gasses coming up with the oil and to prevent
dangerous pressure build up, not waste tons of unrefined petroleum. Beyond the
added pollution it's a huge safety risk that could destroy a bunch of wells.

------
bob33212
What happens when Saudi Arabia collapses? Does the royalty get the fuck out of
town on their private jets with as many gold bars as they can carry?

~~~
yur3i__
UAE and Saudi Arabia imo will be ok. They are trying to build themselves into
big entertainment and tourism hubs with their ventures into sports and
investment in tourism etc I think though they will definitely suffer they may
be able to weather the storm. Kuwait and Qatar on the other hand I'm not so
sure about

~~~
DuskStar
_Saudi Arabia_ is trying to build tourism? From where?

~~~
pjc50
Dubai is definitely a tourist destination for a small number of hyper-wealthy
people. The tourists get to be in the part of the bubble that serves alcohol.

~~~
unexpected
Dubai is definitely a tourist destination, and it's not just for hyper-wealthy
people. They get a huge amount of middle class tourism from South Asia and
China. There's a wide variety of hotels, from 2* to 7* and you can stay in a
superb 5* hotel for $150/night.

It feels like a destination for the hyper-wealthy to Americans because our
tourist offerings here are so much better - but not everyone can come here. My
best analogy for Dubai is that it's like Vegas without the gambling - and
while that may suck for some people, it can definitely be done. Vegas is also
done at every price point!

------
kyleblarson
Also the per day price of a supertanker (~2mm barrels capacity) has been
skyrocketing to well above 100k$ so speculatively buying and storing is
getting riskier. My favorite quote about the storage play comes from the WSJ:

'One of the great trades in modern history involved steep contango and a lot
of oil tankers. In 1990, Phibro, the oil-trading arm of Salomon Brothers,
loaded tankers with cheap crude just before Iraq invaded neighboring Kuwait
and crude prices surged. The trade’s architect, Andy Hall, became known for a
$100 million payday and bought a century-old castle in Germany.'

------
henryw
It's at $0.28 right now
[https://finance.yahoo.com/quote/CLK20.NYM?p=CLK20.NYM](https://finance.yahoo.com/quote/CLK20.NYM?p=CLK20.NYM)

Update: -$35.53 now

~~~
qaq
it hit 0 for a bit

------
carlsborg
Crude spot at $10.80 right now. 40 percent crash in an day.

~~~
yingw787
I pay more for a Chipotle burrito (with guac of course, can't live without
guac). This is incredible.

~~~
lonelappde
A barrel of crude has always cost less than a barrel of burritos.

~~~
yingw787
I can't drink crude without dying

------
kumarski
[https://news.ycombinator.com/item?id=22719949](https://news.ycombinator.com/item?id=22719949)

This is a big deal.

I think EURN might hit 40% divyield which would be nuts.

I'm a gambling lunatic, this is not investment advice.

Floating storage thesis.

~~~
mrnobody_67
Yeah, this is a good speculation.

If Tankers are $150K+ vs. usual $20-40K for any prolonged period of time...

------
lgleason
[edited for typos/grammar] The US was going to top up the strategic reserves,
but that was stopped in congress. Seems like an ideal time to make that happen
with such low prices. Irregardless of environmental concerns, nobody is at a
point where they are not dependent on oil and a supply disruption that this is
designed to address currently would have dire consequences without it. IE:
food shortages etc..

~~~
TMWNN
There is no reason for the US government to pay to take oil out of the ground
to put it into the ground elsewhere.

Fracking has made the US an oil exporter. As others mentioned, fracking has
made the US the world's lowest cost producer.

~~~
marvin
If top US leadership was less demented, they could secretly "buy" up all of
these $-35 May contracts and get paid 35 dollars a barrel to put it in the
strategic reserve.

But if such an agreement had been made in Congress and the US was obligated to
buy at a certain (positive) price, you can bet the price wouldn't be $-35
right now.

------
ardy42
Is the Strategic Petroleum Reserve full yet? If it isn't the Federal
Government should buy up these negative contracts and take delivery.

------
neonate
[https://archive.md/zzq4m](https://archive.md/zzq4m)

[https://archive.md/YoedN](https://archive.md/YoedN)

------
macawfish
People talk about this going away in June, but I don't understand why that
would possibly happen unless producers decide to slow down.

Otherwise, the supply is just going to continue to accumulate.

------
aazaa
Which groups are most likely to lose from this crazy development. A few weeks
ago there was a story about plunging oil prices exposing Capital One to
scrutiny for its surprising exposure to futures.

What others are out there?

------
csours
As "nice" as this is, it's realllllly gonna suck on the other side when the
price snaps back up and keeps going up because some oil producers have gone
out of business.

~~~
jes5199
seems like a good time to invest in electric cars

~~~
rechristened
Tesla Semi isn't even a thing yet. EVs won't be looking so hot when they can't
get parts delivered to their factories.

~~~
jes5199
Buy low, sell high.

------
throwaway_USD
Usually by the time you see commodities activity hitting the front page of HN
the bets are in and the market is about to take a wild swing in the other
direction.

It is very easy to side with the news on oil right now that there is a
historical over supply (so much so we have no place to store it any longer,
and even considering paying producers to leave it in the ground) and we have a
historical drop in demand...so any guesses on what the "news" will be to push
oil prices wildly upwards?

~~~
greenshackle2
WTI was at -36.25$ just now. I hope you didn't put your money where your mouth
is.

~~~
throwaway_USD
>Usually by the time you see commodities activity hitting the front page of HN
the bets are in...

My bet was already in...however, I do think once we start seeing the news like
this proliferate we will see an odd swing by Wednesday or Friday. Still my
question was sincere, if we see a swing, I don't know what the markets
rationale would be...that said where can it go from negative but up

~~~
greenshackle2
Well, I don't want to presume what your bet is, if it was literally buying
this contract and hoping to re-sell it than sorry for your loss I guess.

But yeah it seems like a short-term storage problem and it should bounce back,
if your bet was something else it may yet pay off.

~~~
throwaway_USD
I had some puts on UCO. Last night there was a 25:1 reverse split...I just
sold for >500% return (very small position).

------
xur17
Completely naive question, but I'm curious: all of the negatively priced oil
is coming from Saudi Arabia and Russia. What keeps the US from applying large
tariffs to oil imports from those countries (or on all imports)?

If it's in our best interest to keep US oil companies alive (I understand that
it is), wouldn't this be an effective way to accomplish this goal, with the
side benefit of receiving additional tax revenue?

~~~
tdhoot
Oil companies may benefit from keeping oil expensive, but other parts of the
economy that depend on oil do not. For them, tariffs are an extra tax on them
and ultimately consumers.

~~~
xur17
Aren't Russia and Saudi Arabia playing a short term game to try and run US
shale companies out of business? In that case, wouldn't it be logical for the
government to step in and protect these companies via tariffs rather than
bailing them out in a few months when they go bankrupt? It would presumably be
cheaper.

~~~
tdhoot
I think it's inconclusive if Russia and Saudia Arabia are actually working
together to drive US shale out of business or whether that's just a convenient
side-effect of their own dispute.

But yes, what you describe is known as dumping and governments have enforced
tariffs or quotas to prevent them. I'm not sure if it's ever been done for
oil, possibly because in most cases it'd be political suicide in the US to
argue for higher gas prices for consumers.

------
lonelappde
I understand that it's hard to stop oil production, leading to pileups. But
even after 2 months it's still unstoppable?

~~~
somebodythere
Nobody _wants_ to cut production, unless everyone else does so too. Otherwise
they're just giving up a chunk of their revenue stream for a negligible rise
in prices. It's a classic prisoner's dilemma game.

Anyway, OPEC+ did cut production, a little bit. The market is saying it's not
enough, at least in the near term.

~~~
lonelappde
Surely when storage is full you do start to want to stop production?

~~~
kube-system
That's what producers would do in a competitive and rational market, but oil
is not that. Oil is notoriously anti-competitive and political.

[https://en.wikipedia.org/wiki/2020_Russia%E2%80%93Saudi_Arab...](https://en.wikipedia.org/wiki/2020_Russia%E2%80%93Saudi_Arabia_oil_price_war)

------
whatok
Trading at negative $1.43. Incredible stuff.

~~~
whatok
-$37 now

------
fortran77
I don't understand why this makes the stock indexes drop though. Shouldn't
this be a boost to everyone but oil companies in the S&P 500? Or is dropping
oil prices considered a good leading indicator for a slowing economy?

~~~
beervirus
It's good for some companies, bad for others. Even some companies where it
_seems_ like it'd be a good thing (say, airlines) might be fully hedged
against the price of oil.

------
PanMan
Basically, people pay to prevent this from happening:
[http://thedailywtf.com/articles/Special-
Delivery](http://thedailywtf.com/articles/Special-Delivery)

------
MrGilbert
I'm a software developer, which translates to being somehow smart, but I'm not
that into economics: Will this have a rubber band effect? E.g., the price will
skyrocket in the next 2 - 5 years, because of this?

~~~
protomyth
I have my doubts. TX and ND can reopen wells pretty quickly, so there is a max
limit on the price going up. Plus, fracking efficiency is going to go up with
better techniques.

~~~
pixl97
Eh, not really.

I live in Texas and had worked for a company that developed a software product
for management of things like oil leases. The big issue is not the inability
to re-open oil wells, it's not that hard. It's the people.

When you shut in production you lay people off. Eventually they go elsewhere.
This is a big problem in oil boom/bust cycles. Getting trained operators that
don't mess up the equipment or cause environmental disasters is one of the
bigger problems.

Also, once shut in, the operators that survive the downturn will want to open
later, than earlier. They can profit more by waiting.

~~~
protomyth
Talking to friends in the west, they are keeping a lot of operators on pay
still. I guess it is a how long thing. I'm hoping all the folks with one of
the tribes that made a lot of cash on oil put some away for a rainy day.

~~~
bluGill
The oil companies have learned and try to keep some staff around. However they
can only keep so many and for so long. If this is a fast recovery as some
expect then the people will be needed next summer and it was a smart decision.
If not...

------
caleb1666
Do we know what percentage of futures participants are speculators just at the
casino? It seems like the percent of players actually making/taking physical
delivery is like 0.0000001%

~~~
gezh
Currently, speculators make up roughly 2/3rds of the outstanding WTI contracts
[1].

In most commodities contracts taking/making physical delivery by physical
players is rare. The physical delivery option is there to make sure that the
underlying commodity market and the futures market converge; and you don't
need someone to actually deliver to make that happen. The threat of
delivery/taking delivery is usually enough.

[1]You can get that info from the CFTC here:
[https://www.cftc.gov/MarketReports/CommitmentsofTraders/inde...](https://www.cftc.gov/MarketReports/CommitmentsofTraders/index.htm),
namely in this report:
[https://www.cftc.gov/dea/options/deanymelof.htm](https://www.cftc.gov/dea/options/deanymelof.htm)
. Look for "CRUDE OIL, LIGHT SWEET".

------
vadym909
Would this slow down the move to electric cars? If gas is so cheap, it takes
away one of the major advantages.

------
symplee
Anyone still talking about peak oil? :)

[https://en.wikipedia.org/wiki/Predicting_the_timing_of_peak_...](https://en.wikipedia.org/wiki/Predicting_the_timing_of_peak_oil)

~~~
altcognito
I have to imagine you are being facetious. "good oil" peaked a long time ago,
and while it is still being produced, the only reason we have oil at all is
because of all the dirty fracking, shale and sand oil out there.

~~~
symplee
The comment was to lightheartedly point out the incorrect doom and gloom
predictions over the last 100 years, where people have been predicting that
we're going to run out of oil "soon." Now we have so much we can't get rid of
it.

For example:

[https://paleofuture.gizmodo.com/weve-been-incorrectly-
predic...](https://paleofuture.gizmodo.com/weve-been-incorrectly-predicting-
peak-oil-for-over-a-ce-1668986354)

~~~
symplee
Really not sure why both of my comments are getting down-voted into oblivion,
but case and point, oil is now trading at -$37.00 ( _negative_ thirty seven
dollars)

[https://www.marketwatch.com/investing/future/crude%20oil%20-...](https://www.marketwatch.com/investing/future/crude%20oil%20-%20electronic)

Can someone explain the down-votes?

~~~
altcognito
"Running out of oil" and "peak oil" would be two completely different things.
Lightheartedly pointing out something as if it didn't happen when in fact it
did happen, will get you downvoted.

It is easy to agree that "running out of oil" sometimes was conflated with
"peak oil", but alas, that's just ignorance.

~~~
beervirus
Except it hasn't happened yet.

[https://en.wikipedia.org/wiki/File:Global_liquids_and_US_tig...](https://en.wikipedia.org/wiki/File:Global_liquids_and_US_tight_oil.png)

~~~
altcognito
Perhaps I was not clear. This graph you are sharing is shale oil, not the pure
stuff found in oil shales. Regular oil production reached peak in 1970. We
invented new sources that were considered untappable because of the expense of
extracting it at one point. I'm not saying this is bad, I'm just saying that
peak oil, as it was originally defined, is very much a real thing.

On the plus side for oil enthusiasts, we will probably not run out of the more
dirty variety for quite some time.

[https://en.wikipedia.org/wiki/Peak_oil#/media/File:Hubbert_U...](https://en.wikipedia.org/wiki/Peak_oil#/media/File:Hubbert_Upper-
Bound_Peak_1956.png)

(also see article refered to by this)

~~~
beervirus
Did the original definition specifically refer to non-shale oil? That doesn't
seem too likely. It was just about total production.

[https://www.youtube.com/watch?v=ImV1voi41YY](https://www.youtube.com/watch?v=ImV1voi41YY)

The fact that we've made new sources viable means we haven't hit the peak yet.

------
adelHBN
Isn't each contract 1,000 barrels? If so, that's about $40k per contract.
There something wrong here. I can see $0, or -$1-2. But almost -$40 is
illogical. Something's wrong with the system.

~~~
neop1x
Price is per barel. Although o e contract consists of 1000 barells. So the
price is $1 for the future but you would have to pay $1000 to buy one
contract. It is similar with options, alyhogh 100 pcs is standard there.

------
billfruit
Why wasn't the oils producers reducing their production fast enough to prevent
the price from crashing. This to me looks like a lag and inelasticity in how
the oil producers are responding to demand.

~~~
snarf21
I was listening to some a podcast when oil first dropped and they were saying
the issue is that a lot of the small producers are on leases and then may have
to pump at a loss just to keep it and try to make it up later. Or burn
everything they already spent. A lot went all in and levered up and are now
stuck.

Additionally, if SA stops pumping, then Russia gets all their revenue (even if
it is lower per barrel). It is a great big game of chicken.

------
Fiveplus
All I'm interested in knowing about the near future and long term
implications. Any articles/blogs/podcasts to quench my inquisitive mind?

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alach11
It's a great time to own a supertanker. You can get a 300% return on
investment by buying a May contract and selling a contract for August.

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Faaak
You'd be a bad speculator. What if contracts in august are worse near the end
?

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timerol
That doesn't matter. If you sell a contract for August now, the buyer of the
contract is the person who has to worry about the price of the contract going
down. As the seller, you just have to deliver the goods as specified by the
contract. You've already been paid.

The relevant missing fact here is that the 300% ROI ignores the cost to
operate a supertanker.

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Faaak
Indeed. Thanks

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giarc
Anyone with insight what we will see tomorrow when the May contract issue
isn't in play?

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hcs
Here's June:
[https://finance.yahoo.com/quote/CLM20.NYM?p=CLM20.NYM](https://finance.yahoo.com/quote/CLM20.NYM?p=CLM20.NYM)

~~~
giarc
So tomorrow the price on say Yahoo Finance page will just show the June price
of $22 or whatever it will be at opening? So it's not really a continuous
price.

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kccqzy
You can choose the see the price of the front month, or a specified month.

The former:
[https://finance.yahoo.com/quote/CL=F?p=CL=F](https://finance.yahoo.com/quote/CL=F?p=CL=F)
That indeed wouldn't really be continuous because the object being priced is
different.

Also I may be wrong but tomorrow on the day of expiration these contracts can
still be traded.

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paxys
Article title changed to "below $10".

Edit: now "below $5".

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Animats
Great time to fill up the US strategic oil reserve. Congress didn't fund
Trump's plan to have the Government buy up excess oil to prop up the price.
But with prices negative, the Department of Energy can go ahead and fill up
the underground storage anyway. Might need it someday.

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1-6
Time to make more tar and repave the roads.

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philjohn
Does this not make the case for investing in renewables over shale extraction
and fracking that has a price floor below which it's not economical?

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hirundo
Generally an increase in oil prices is considered an argument for more
renewable investment. You're saying that a decrease in price is too. Is there
_any_ oil price movement that doesn't argue for more renewables to you? How
about no change, is that a case for more renewable investment?

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dd36
Renewables aren’t subject to huge price swings.

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thebean11
Is that actually true? You'd think solar would swing dramatically between day
and night..

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manquer
Renewalable prices I am sure is what he meant .

Sun is always shining somewhere , solar is very predictable and cyclical.

Volatility is not caused by change but lack of predictability of changes . Oil
production is controlled by few dictators with no transparency into their
decision making . Most other markets including solar are far more distributed
and rational

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DevX101
Someone's going to find a creative way to store large amounts of oil and make
a lot of money in a few years.

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orev
Maybe we can store it in large underground caverns (or maybe porous basins)
and then pump it up to the surface only when we need it. We would probably
want to coordinate with other people also doing pumping in their region, as
not to end up with too much on the surface that we can’t use and then have
nowhere to put it.

~~~
asah
I assume you're making a sarcastic reference to the Strategic Petroleum
Reserve.

[https://en.wikipedia.org/wiki/Strategic_Petroleum_Reserve_(U...](https://en.wikipedia.org/wiki/Strategic_Petroleum_Reserve_\(United_States\))

~~~
sambroner
I believe (s)he's making a sarcastic reference to oil in the ground.

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eric_khun
someone can explain me why they just don't stop pumping?

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bityard
It's a bit like asking why a train can't simply stop when there's a car parked
on the tracks.

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neycoda
Paywall

