
Ask HN: Negative oil futures from last week. Did people take possession? - throwaway158497
There was big news last week that Oil futures for May were negative. So, what happened to all the oil after that? Did people take possession of it? Did the suppliers stop producing more oil?<p>I have seen that oil containers are lined up outside Los Angeles but have no more insight into it. Will June production be less?
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raincom
Most of the oil traders are neither producers nor consumers (airlines, gas-
powered electric utilities, etc). A few of these traders have experience in
taking possession. Whoever doesn't have experience in that will just pay
premium (that is, negative prices) to rid of their contracts.

June 2020 futures have been trading since 2018. Small oil producers, unlike
Saudi and Russia, hedge their oil by selling calls or buying puts or a
combination of them.

Where does this end? Just transfer that negative premium to oil producers to
NOT send the oil. However, this won't happen, as negative prices tend to
happen on the last two days of the front month. Unless we see negative for
July futures right now (in April), oil producers just follow their contracts.

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nabla9
If I understand it correctly, the oil traded in those futures was already on
it's way to Cushing, Oklahoma when the price became negative.

What it meant was that future sellers had to pay for buyers to accept those
futures. There was enough capacity to take that oil.

