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Thread: Oil Futures Negative

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    Oil Futures Negative

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    What are the consequences? How long will it last?

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    Senior Contributor DOR's Avatar
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    It’s mainly a storage issue.

    European Brent fell to $27, but West Texas Intermediate hit $11. That’s the May futures contract, which requires taking delivery (or selling on) in Cushing Oklahoma, and Cushing’s full. Brent crude can be delivered to multiple locations, so very little storage concern.

    Sell May ($11), buy June ($23).
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    How about the costs of 'fracking' and the Muscovite spot price (and income). From a basic glance it makes fracking unprofitable and will have some nasty consequences for Muscovite revenue.

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    Senior Contributor DOR's Avatar
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    Quote Originally Posted by snapper View Post
    How about the costs of 'fracking' and the Muscovite spot price (and income). From a basic glance it makes fracking unprofitable and will have some nasty consequences for Muscovite revenue.
    I'm sure that makes you as unhappy as it makes me ...

    At $11/bbl, a lot of extraction activity stops.
    But, we aren't at $11/bbl on the spot market, not yet.
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    Turbanator Senior Contributor Double Edge's Avatar
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    Quote Originally Posted by snapper View Post
    What are the consequences? How long will it last?


    It's a warning shot

    Economies aren't going to need much oil any time soon sending sellers into more debt.

    This also means its easier for economies to recover as fuel costs are rock bottom.

    That's the upside.

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    Senior Contributor DOR's Avatar
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    The downside is that anyone depending on oil is going to slash consumption of other goods and services right down to the bone.
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    Turbanator Senior Contributor Double Edge's Avatar
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    Bad times for sellers no doubt.

    The part where the seller has to pay the buyer to take the oil was a surprise : )

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    Senior Contributor DOR's Avatar
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    Quote Originally Posted by Double Edge View Post
    Bad times for sellers no doubt.

    The part where the seller has to pay the buyer to take the oil was a surprise : )
    Generally, speculators do the shafting. But, every once in a while — Hunt Brothers and Silver, about 40 years ago comes to mind — they get shafted. Quite entertaining, actually.
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    Turbanator Senior Contributor Double Edge's Avatar
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    So what is the moral of the story ?

    Russian & Saudi oil producers having a go at each other and in turn trying to bankrupt American frackers end up getting hurt too.

    Question is how badly have they hurt those frackers

    What does this mean for US Saudi relations.

    Purely business nothing personal ?

    Attacking American energy self sufficiency isn't going to go down well.
    Last edited by Double Edge; 23 Apr 20, at 22:44.

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    Senior Contributor DOR's Avatar
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    Quote Originally Posted by Double Edge View Post
    So what is the moral of the story ?

    Russian & Saudi oil producers having a go at each other and in turn trying to bankrupt American frackers end up getting hurt too.

    Question is how badly have they hurt those frackers

    What does this mean for US Saudi relations.

    Purely business nothing personal ?

    Attacking American energy self sufficiency isn't going to go down well.
    Why does there need to be a moral to an historic fact ... not a story?
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  11. #11
    Turbanator Senior Contributor Double Edge's Avatar
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    This fact would not have come about but for the actions of those two.

    There is a context here, this fact didn't just happen on its own.

    A price war at the outset of a pandemic ?

    I wonder what they are thinking now.

    US-Saudi oil clash sets the stage for future epic battle | WION | Apr 15 2020

    An immediate crisis has been averted with an agreement on Sunday, April 12 between members of the Organisation of Oil Exporting Countries (OPEC) and non-OPEC producers to cut production by some 10 million barrels a day.

    But 13 US Republican Congressmen from oil-producing states put Saudi Arabia on notice in a two-hour phone call with Saudi Energy Minister Abdulaziz bin Salman a day after the agreement.

    “While we appreciate them taking the first step toward fixing the problem they helped create, the Saudis spent over a month waging war on American oil producers, all while our troops protected theirs. That’s not how friends treat friends. Their actions were inexcusable and won’t be forgotten. Saudi Arabia’s next steps will determine whether our strategic partnership is salvageable,” said North Dakota Senator Kevin Cramer
    Last edited by Double Edge; 24 Apr 20, at 12:00.

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    Field mechanik Senior Contributor omon's Avatar
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    price at the pump today in long island was 2 bucks for regular, about a buck less than usually, but still not in negative range
    "Democracy is two wolves and a lamb voting on what to have for lunch. Liberty is a well-armed lamb contesting the vote!" B. Franklin

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    Defense ProfessionalSenior Contributor tbm3fan's Avatar
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    Quote Originally Posted by omon View Post
    price at the pump today in long island was 2 bucks for regular, about a buck less than usually, but still not in negative range
    Crude going negative was amazing. Gasoline going negative and being given away at the station then sign my ass up!!!! I've got ten cars to fill to the brim...
    Last edited by tbm3fan; 24 Apr 20, at 21:59.

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    Quote Originally Posted by omon View Post
    price at the pump today in long island was 2 bucks for regular, about a buck less than usually, but still not in negative range
    The retail price of gasoline and other refined petroleum products are not, and never will be, comparable to the price of crude oil.

    You will not - ever - see gasoline being "sold" at the pump at negative prices.
    TwentyFiveFortyFive

  15. #15
    Field mechanik Senior Contributor omon's Avatar
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    lol, my bad i should have added smiley face, it was a joke,
    "Democracy is two wolves and a lamb voting on what to have for lunch. Liberty is a well-armed lamb contesting the vote!" B. Franklin

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