Maybe it's not a mistake. I checked again and it was $0.01/bbl. I looked at their live charts

https://www.macrotrends.net/2566/crude-oil-prices-today-live-chart

View attachment 204895
If this is real, this is very scary.

Oh, frack!

 

You guys realize you could buy 10,000 barrels of oil, right now, for $100.

But you have to take delivery in May. Where are you going to put it?

You'd need 42 10,000 gallon swimming pools.

 

As of 17 minutes ago, they are giving away $20 for every barrel you take off their hands:



The damn ticker has got to be broken.

 

It's real. It could literally go negative soon. That'll ensure every empty tank gets filled. I wonder if John Denver's place still has tanks.

[edit] LOL, so much for my "prediction"

 

$40 below zero.

https://www.bloomberg.com/news/arti...year-low-on-global-demand-crunch-storage-woes

We are witnessing history. Never forget.

 

Okay, so I think I might understand what $0.01/bbl means in practical terms.

It basically says that the big buyers are not willing to buy oil at ANY price because they are concerned (convinced?) that there is simply no place to put it. So what happens if their contract expires and they literally have no place to take delivery to? I don't know, but I wouldn't be surprised if they still have to purchase the oil and either forfeit it or perhaps even face penalties and lawsuits because the oil suppliers have a contract by which you are to get it the hell out of their tanks so that they can move current production into them.

 

@WBahn -- there's one of your answers:

The difference CLc1-CLc2 between the expiring May U.S. West Texas Intermediate crude contract and the coming June contract widened to a record at more than $22 a barrel. That yawning gap emerged because owning the May contract when it expires on Tuesday means that buyer is obligated to take those barrels.

As a result, futures traders, who would normally be able to shift from the expiring contract to the next, are finding few buyers for the expiring May contract to take delivery of barrels. As more traders dump the May contract CLc1, it has crashed, lately trading at less than $6 a barrel.

So what happens if their contract expires and they literally have no place to take delivery to?

You pay someone to take possession. Then, you jump out of a window.

 

https://www.powerlineblog.com/archives/2020/04/the-end-of-oil-dont-bet-on-it.php

Something extraordinary is happening today: the spot price of oil appears to have fallen into negative territory—in other words, some producers and suppliers will pay you to take their oil. (Actually what this really represents are the speculators who have to unwind their imminent futures positions, even at a huge loss, because they don’t have enough backyard swimming pool space to take physical delivery of oil.

I love these guys at Powerline Blog. They think like me.

But you have to take delivery in May. Where are you going to put it?

You'd need 42 10,000 gallon swimming pools.

 

$40 below zero.

https://www.bloomberg.com/news/arti...year-low-on-global-demand-crunch-storage-woes

We are witnessing history. Never forget.

So that largely confirms my thinking that if you fail to take delivery that it isn't a matter that you just forfeit the money you paid for the contract, but you are liable for lawsuits for not fulfilling the contract terms and they will probably go after you in a serious way because they need that tank emptied. That's the only reason that someone would pay someone else $40/bbl to take that contract off their hands -- they must believe that not getting rid of it will cost them more than $40/bbl.

 

This is unbelievable... what now? Freeze all worldwide production?

 

This is unbelievable... what now? Freeze all worldwide production?

This price is only for May contracts (which I understand expire tomorrow). June contracts are still trading over $20.

 

Market closes at -$37.63 for May WTI.

 

This is unbelievable... what now? Freeze all worldwide production?

So the feel I'm getting is that the problem is that people holding May contracts are very concerned about getting sued if they can't take delivery in May (I don't know what time frame the contracts have -- if a given contract specifies a given date and different contracts have different dates, or if all May contracts have the same date, or if all May contracts let you take delivery just some time in May). So people holding those contracts are willing to pay a LOT in order to get out from under that obligation.

People that have contracts in June are still sufficiently confident that there will be someplace to take delivery that they are willing to buy contracts at ~$20/bbl. So the consensus would seem to be that, if nothing else, production will slow enough in the meantime for the lower-than-usual demand to still to clear out enough space to park that oil when it get here.

 

So the bottom line is that I'm probably very happy that I didn't find a way to buy that million barrels of oil at a penny each!

 

So the bottom line is that I'm probably very happy that I didn't find a way to buy that million barrels of oil at a penny each!

But you missed an easy $20M by not taking possession of 500,000 bbls for free.

 

But you missed an easy $20M by not taking possession of 500,000 bbls for free.

Why do I have the feeling that that $20M wouldn't have covered by legal fees? I'm betting that the person paying that $20M, with a lot more knowledge about how this works than I have, figured that paying me $20M would shift a significantly larger cost from him to me.

It does make me very curious about what actually will happen to the people that get stuck with those contracts. I imagine some will make out extremely well as they manage to find places to put the oil, but what about the ones that don't. I'd like to find out when it's all said and done how much it actually cost them.

 

Why do I have the feeling that that $20M wouldn't have covered by legal fees? I'm betting that the person paying that $20M, with a lot more knowledge about how this works than I have, figured that paying me $20M would shift a significantly larger cost from him to me.

Why pay legal fees? Just dump the oil on your property, apply to have the property condemned as a "Superfund" site, and get even more government money to clean it up.

See? You gotta think BIG!

 

It means that someone is holding a contract to purchase x bbls at $??/barrel in May 2020.
Meanwhile, one can buy the real thing for $10.
So the person holding the contact is giving you $40 to take the contract off his hands.
But whoever buys the contract now has nowhere to store the oil because all storage hubs are at capacity.

 

Ever heard of demurrage? It can be a killer along with port and docking fees. They sell it to MOVE it, not to keep it in stock until you are ready to take delivery.

 

Ah, the days of $0.25 per gallon gas. In grad school (while studying very hard), I had a 1965 VW 1300. I could date a young beauty in Poughkeepsie and afford not only the gas, but the Garden State Parkway $0.25 tolls every 500 feet or so.

Maybe the oil companies will pay indirectly for all the money being handed out.