My worry is the same fate could befall brent, just at a slower pace. Same storage problem seems inevitable. Just a caution to those not in for the long haul.
While talking abt WTI and Brent, may be many still don’t understand the difference between WTI and Brent. Here is the video for you guys to understand further. https://youtu.be/Yp4wFZeY0fk
Copy n paste 明天是witi原油五月份期货交割时间,由于美国大部分石油仓库都已填满,如果这些实物合约交货,买家就必须自己额外花钱购买储存仓库,或者干脆租用油轮在海上飘着,所以很多人都到贴运输费以便请人把原油拉走,这是今天原油暴跌的核心根源,但是这仅限于今天,因为明天6月份合约原油又涨到22美元
Stocks fall as U.S. oil prices go negative Energy supply and demand concerns amid the coronavirus pandemic escalated further, sending crude oil prices tumbling to a fresh multi-decade low.
(Reuters) - Energy traders fled from the expiring May US oil futures contract in a frenzy on Monday, sending the contract into negative territory for the first time in history, as barely any buyers are willing to take delivery of oil barrels because there is no place to put the crude.
May US crude futures careened into negative territory about 20 minutes before the end of trading, falling to minus US$8 a barrel, down 146%.
With demand down 30% worldwide due to the coronavirus pandemic, and the main US storage hub in Cushing, Oklahoma expected to fill up in a matter of weeks, very few want to be stuck with oil barrels that they have to take delivery on at some point during May.
"The people who are long are desperate to get out," said Phil Verleger, a veteran oil economist and independent consultant.
@monetary invest, trade, punt whatever is fine. just don't spit poisonous words. make yourself more like human but not a poisonouse snake. All curses will follow u till ur last moment. When u breath in ur last breath u want to recall all the beautiful things but not all the harsh words u said. 20/04/2020 8:11 PM
Touche monetary...
British poet George Herbert said, "Good words are worth much, and cost little." One such word is grace. Grace is a sense of fitness and propriety. It is also a disposition to be generous and helpful. It's a word we don't hear too often in forum like this, except perhaps when someone has fallen out of grace, or behaved disgracefully. Grace is a golden link that binds us to others, and it applies to all our relationships, whether it's dealing with our employees, colleagues, clients, family or friends. It's also the link of civility that connects us to strangers. Grace costs nothing but it buys us a lot of goodwill.
Bottom line is Give without grudge, or don't give at all..
Meow..
so delightful to find culture n arts in a Malaysian stk market forum, refined music & poem ,an unexpected treat, Grace is like the beautiful multi colours Tulips of spring, bring out Joy, Hope, & Gratefulness, to the Divine Creator & Giver of everything nice, we stand in awe at the tulips beauty, it is nature's gift to us to enjoy, not a burden to be reciprocated, all from the Grace of our Creator,...hahaha
Stores never pay shoppers to take their goods away, but in extreme circumstances some businesses do, though generally in a very limited way. What’s happened in the oil market, however, was a massive and unprecedented negative swing, as the price on some futures contracts for West Texas crude fell to minus $37.63 a barrel. A collapse in petroleum demand from pandemic-driven lockdowns, a price war among the world’s largest producers that flooded the market, storage facilities nearing their capacities and the monthly rhythms of the futures market all played a role in the jaw-dropping development.
1. Why would a seller pay a buyer to take their oil?
For some producers, it may be cheaper in the long run than shutting down production or finding a place to store the supply bubbling out of the ground. Many worry that shutting their wells might damage them permanently, rendering them uneconomical in the future. There are also traders who buy oil futures contracts as a way of betting on price movements who have no intention of taking delivery of barrels. They can get caught by sharp price drops and face the choice of finding storage or selling at a loss. And the escalating glut of oil has made storage space scarce, and increasingly expensive.
2. Where did the glut come from?
Either the pandemic or the price war by itself would have rocked the energy markets. Together they have turned them upside down. As the virus began to spread around the globe, it began eating away at oil demand in stages. But just as countries like Italy showed what kind of damage a national lockdown could do economically, Saudia Arabia and Russia, the world’s biggest oil producers, butted heads. A pact that had restrained production collapsed and both countries opened their taps to the fullest, releasing record volumes of crude into the market.
4. What did futures contracts have to do with that?
The lowest prices came in trades in futures -- contracts in which a buyer locks in a purchase at a stated price at a stated time. Futures are a tool for users of oil to hedge against price swings, but also a means of speculation. The contracts run for a set period, and traders who don’t want to unwind their position or take delivery generally roll over their contracts shortly before expiration. Contracts for May delivery were due to expire on April 21, putting maximum pressure the day before on traders whose contracts were coming due. For them, selling at a steeply negative price was better than filling bathtubs with oil, though the market rout was such that the physical domestic crude market did see trades on an outright basis for grades like WTI in Midland, Mars Blend, Light and Heavy Louisiana Sweet crudes at negative levels.
6. What happened to storage?
Since the glut began to build and prices began to fall, storage facilities have been moving toward capacity. Crude stockpiles at Cushing in Oklahoma-- America’s key storage hub and delivery point of the West Texas Intermediate contract -- have jumped 48% to almost 55 million barrels since the end of February. The hub had working storage capacity of 76 million as of Sept. 30, according to the Energy Information Administration. The industry has been accumulating supply aboard ships, while contemplating other creative options such as storing oil aboard rail tankers. The Trump Administration, which is concerned about the possible ripple effect from oil bankruptcies, is eyeing a proposal, which is still in its infancy, to pay oil drillers to keep their oil in the ground temporarily. The idea would be to keep it off the market until prices recovered, giving the Treasury a healthy profit while protecting producers from immediate losses.
This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
PresidentRotiCanai
1,122 posts
Posted by PresidentRotiCanai > 2020-04-21 00:43 | Report Abuse
Oil futures contract expiring Tuesday dives 50% to below $8, lowest in three decades