Author Topic: Oil at $23  (Read 7382 times)

bwall

  • Pencil Stache
  • ****
  • Posts: 834
Re: Oil at $23
« Reply #50 on: April 15, 2020, 06:38:09 AM »
I think that we interpret the same data in different ways.

alcon835

  • Stubble
  • **
  • Posts: 179
Re: Oil at $23
« Reply #51 on: April 15, 2020, 07:18:35 AM »
Well, Oil is officially sub $20. If this holds, it's going to be an interesting week.

MustacheAndaHalf

  • Magnum Stache
  • ******
  • Posts: 2988
Re: Oil at $23
« Reply #52 on: April 15, 2020, 09:03:43 AM »
Normally oil is more valuable than it's storage tank.  But storage is getting to be a scarce resource.
 Shouldn't oil storage costs should get higher and higher as mid-May approaches?
https://oilprice.com/Energy/Crude-Oil/US-Oil-Storage-To-Hit-Its-Limit-By-Mid-May.html

In general I don't think I can predict oil, so I haven't really planned to change anything.  It's still possible oil producers change their minds, and come up with bigger production cuts.

ice_beard

  • Stubble
  • **
  • Posts: 165
  • Location: East Bay, CA
Re: Oil at $23
« Reply #53 on: April 15, 2020, 10:30:23 AM »
WTI < $20 today.  Probably more where that came from.  I picked up some SLB and COP. 
SLB has maintained a $.50 dividend for a long time.  Wonder when they'll pull the plug on that? 

MustacheAndaHalf

  • Magnum Stache
  • ******
  • Posts: 2988
Re: Oil at $23
« Reply #54 on: April 15, 2020, 08:32:00 PM »
WTI < $20 today.  Probably more where that came from.  I picked up some SLB and COP. 
SLB has maintained a $.50 dividend for a long time.  Wonder when they'll pull the plug on that?
You see prices probably going lower, but you're buying now?

ice_beard

  • Stubble
  • **
  • Posts: 165
  • Location: East Bay, CA
Re: Oil at $23
« Reply #55 on: April 15, 2020, 10:00:03 PM »
WTI < $20 today.  Probably more where that came from.  I picked up some SLB and COP. 
SLB has maintained a $.50 dividend for a long time.  Wonder when they'll pull the plug on that?
You see prices probably going lower, but you're buying now?

I don't know how low they'll go.  Do you?  They recovered nicely after I bought.  My hope is in maybe ten years they will be worth more. 

alcon835

  • Stubble
  • **
  • Posts: 179
Re: Oil at $23
« Reply #56 on: April 16, 2020, 06:52:50 AM »
WTI < $20 today.  Probably more where that came from.  I picked up some SLB and COP. 
SLB has maintained a $.50 dividend for a long time.  Wonder when they'll pull the plug on that?
You see prices probably going lower, but you're buying now?

I don't know how low they'll go.  Do you?  They recovered nicely after I bought.  My hope is in maybe ten years they will be worth more.

Agreed. Don't try to time the market - you'll miss out.

Nicholas Carter

  • Stubble
  • **
  • Posts: 134
Re: Oil at $23
« Reply #57 on: April 16, 2020, 11:44:46 PM »
If anyone is betting on reversion to some mean, please explain why the mean has anything to do with the price of oil in Saudi Arabia.
Worldwide production as of April 10 is up 3 percent. But worldwide supply in storage is up over 10 percent. The idea is that the price action is not really driven by rising supply, but falling demand. When Shelter in Place Orders end, assuming there isn't a three year long recession kicking off, the price of oil should be expected to go back to basically where it was in February, which was about 55 dollars, as demand returns to February's demand. So if you assume SPO's ending in the next six months, you should expect a 100% return on oil prices by this time next year. If the economy is really rocked so bad that oil is still under 30 dollars in 12 months, you'll be too busy buying the S&P for 1,000 to care.
Will it though? I've been hearing the exact same argument since I was in elementary school (37 now) and gas is the cheapest it's ever been in my life time.  It was $1.19/gal this morning on my drive to work.  Maybe 30 years from now it will be even cheaper for a whole variety of reasons and people will still be talking about how "it can only go up" because it's a limited and non-renewable resource.
The cheapest gas in my part of the country that I can remember was about 90 cents nominal, which adjusts to about 1.70 in current dollars. The place across the street is still selling gas for 1.60. But a month ago that price was about 2.40. Right now oil and the S&P are basically the same bet: When the lockdowns end, everything is just going back to business as usual.

PJC74

  • 5 O'Clock Shadow
  • *
  • Posts: 83
Re: Oil at $23
« Reply #58 on: April 17, 2020, 08:14:03 AM »
home heating oil in my area of the northeast is down to 1.49 gallon.

MustacheAndaHalf

  • Magnum Stache
  • ******
  • Posts: 2988
Re: Oil at $23
« Reply #59 on: April 17, 2020, 08:58:47 AM »
WTI < $20 today.  Probably more where that came from.  I picked up some SLB and COP. 
SLB has maintained a $.50 dividend for a long time.  Wonder when they'll pull the plug on that?
You see prices probably going lower, but you're buying now?
I don't know how low they'll go.  Do you?  They recovered nicely after I bought.  My hope is in maybe ten years they will be worth more.
Oh, I didn't mean it like that.  I'm actually curious about why you did it now, instead of waiting one week or one month.

Next month oil storage should be close to full, pushing oil prices even lower.  But things can change - so I'm guessing you have a reason why you aren't waiting for mid-May to buy.

When money I sent to Interactive Brokers arrives, I plan to make several investments - one of them would be heavily impacted by oil prices.  I have no choice but to wait right now, but I'm also wondering how to spread out the investment (probably half next week, half the week after that).
« Last Edit: April 17, 2020, 09:01:54 AM by MustacheAndaHalf »

bwall

  • Pencil Stache
  • ****
  • Posts: 834
Re: Oil at $23
« Reply #60 on: April 17, 2020, 09:54:33 AM »
Worldwide production as of April 10 is up 3 percent. But worldwide supply in storage is up over 10 percent. The idea is that the price action is not really driven by rising supply, but falling demand. When Shelter in Place Orders end, assuming there isn't a three year long recession kicking off, the price of oil should be expected to go back to basically where it was in February, which was about 55 dollars, as demand returns to February's demand.

Once the Shelter in Place order ends, demand might return to February's level (or it might not). But, let's assume that it does. There is still a glut of oil in the marketplace that has to be worked off before prices can rise to February's level.

COVID-19 led to a drop in demand, but not a drop in supply. (Supply in fact went up). So, in order for the prices to rise, demand must be greater than supply. I think it's going to be a long time still before demand for oil is greater than the supply of oil. YMMV.

markbike528CBX

  • Handlebar Stache
  • *****
  • Posts: 1421
  • Location: the Everbrown part of the Evergreen State (WA)
Re: Oil at $23
« Reply #61 on: April 17, 2020, 10:42:56 AM »
Any thoughts on buying long USO
http://www.uscfinvestments.com/uso    even though it has a 73% fee?


Asking for a friend ( really). 
"Also bought oil (uso) longer term speculative play...."

As I recall, this friend tends to buy bad things at bad times. So I tend to do nothing, but sometimes regret that I hadn't bought contrary positions.

I have no dry powder at this time, so I'll spectate again.

powskier

  • Bristles
  • ***
  • Posts: 381
Re: Oil at $23
« Reply #62 on: April 17, 2020, 10:24:22 PM »
Been buying some tanker stocks and they have great dividends. That oil has to go somewhere and they are not going to stop pumping it in Russia (too expensive to stop). The Shale in North America is going to go out of business, then the rest of the world is free to jack up oil and we will see price spikes with inflation once that plays out in a year or two.

History is full of times where full tankers just had to drop anchor and wait. Plenty of the new work at home crowd will remain work at home after this. Plenty of people will adopt the depression era mentality of only buying essentials. The roaring 20's are over already, demand for oil will not come roaring back. Oil is also easier and easier to get. I wouldn't bet on any oil play personally.

vand

  • Handlebar Stache
  • *****
  • Posts: 1055
  • Location: UK
Re: Oil at $23
« Reply #63 on: April 20, 2020, 04:20:00 AM »
Sub $15 now.
These are incredible days.

marty998

  • Walrus Stache
  • *******
  • Posts: 7038
  • Location: Sydney, Oz
Re: Oil at $23
« Reply #64 on: April 20, 2020, 04:23:20 AM »
WTI < $20 today.  Probably more where that came from.  I picked up some SLB and COP. 
SLB has maintained a $.50 dividend for a long time.  Wonder when they'll pull the plug on that?
You see prices probably going lower, but you're buying now?

I don't know how low they'll go.  Do you?  They recovered nicely after I bought.  My hope is in maybe ten years they will be worth more.

Agreed. Don't try to time the market - you'll miss out.

Holy crap. That advice applies if you're an index investor. Not if you are buying individual oil stocks.

God the advice on this forum is downright terrible sometimes.

marty998

  • Walrus Stache
  • *******
  • Posts: 7038
  • Location: Sydney, Oz
Re: Oil at $23
« Reply #65 on: April 20, 2020, 04:26:00 AM »
Sub $15 now.
These are incredible days.

Oil is cheaper than water at 10c a litre lol.

If you take the view that the maximum downside is US$15 per barrel, and the chances of oil staying at $15 and not going above that forever is slim.... I'm asking myself why I'm not gobbling up as much oil as possible...

Trevor Reznik

  • 5 O'Clock Shadow
  • *
  • Posts: 91
Re: Oil at $23
« Reply #66 on: April 20, 2020, 05:59:51 AM »
Sub $15 now.
These are incredible days.

Oil is cheaper than water at 10c a litre lol.

If you take the view that the maximum downside is US$15 per barrel, and the chances of oil staying at $15 and not going above that forever is slim.... I'm asking myself why I'm not gobbling up as much oil as possible...

Just hit $11.44 as I type this.  The big fear right now is they are running out of places to store it, might have to pay people to take your oil at this rate.  What that does to the global economy noone knows.

bwall

  • Pencil Stache
  • ****
  • Posts: 834
Re: Oil at $23
« Reply #67 on: April 20, 2020, 06:07:16 AM »
Probably a good chance we have seen the bottom.

You know that when people are talking about a negative price and paying people to take the stuff off your hands that the last bull has turned bear... I mean WHY would you pay someone to take it off your hands? Just stop pulling it out of the ground before then.. duh!

Oil is cheaper than water at 10c a litre lol.

If you take the view that the maximum downside is US$15 per barrel, and the chances of oil staying at $15 and not going above that forever is slim.... I'm asking myself why I'm not gobbling up as much oil as possible...

Just hit $11.44 as I type this.  The big fear right now is they are running out of places to store it, might have to pay people to take your oil at this rate.  What that does to the global economy noone knows.

What a difference two weeks make!

darkelfx

  • 5 O'Clock Shadow
  • *
  • Posts: 19
Re: Oil at $23
« Reply #68 on: April 20, 2020, 06:09:06 AM »
Sub $15 now.
These are incredible days.

Oil is cheaper than water at 10c a litre lol.

If you take the view that the maximum downside is US$15 per barrel, and the chances of oil staying at $15 and not going above that forever is slim.... I'm asking myself why I'm not gobbling up as much oil as possible...

Just hit $11.44 as I type this.  The big fear right now is they are running out of places to store it, might have to pay people to take your oil at this rate.  What that does to the global economy noone knows.

Apparently not enough. While Crude oil is down to $11/barrel (-38%), oil stocks are only down 5%. Oil companies haven't hit their all-time lows yet, while crude oil is hitting record lows.

TheAnonOne

  • Handlebar Stache
  • *****
  • Posts: 1620
Re: Oil at $23
« Reply #69 on: April 20, 2020, 10:07:14 AM »
Sub $15 now.
These are incredible days.

Oil is cheaper than water at 10c a litre lol.

If you take the view that the maximum downside is US$15 per barrel, and the chances of oil staying at $15 and not going above that forever is slim.... I'm asking myself why I'm not gobbling up as much oil as possible...

Just hit $11.44 as I type this.  The big fear right now is they are running out of places to store it, might have to pay people to take your oil at this rate.  What that does to the global economy noone knows.

Apparently not enough. While Crude oil is down to $11/barrel (-38%), oil stocks are only down 5%. Oil companies haven't hit their all-time lows yet, while crude oil is hitting record lows.

Silly question maybe, but can you actually "buy" an ETF that tracks oil price? I have a "fun" account that wouldn't mind to go up 500% in a few months ha

vand

  • Handlebar Stache
  • *****
  • Posts: 1055
  • Location: UK
Re: Oil at $23
« Reply #70 on: April 20, 2020, 10:13:17 AM »
The contago in the oil markets puts the next month contract at almost double the current spot price. That effectively means its costing you as much to store it for 1 month as it does to buy the oil itself...

maizefolk

  • Magnum Stache
  • ******
  • Posts: 4813
Re: Oil at $23
« Reply #71 on: April 20, 2020, 10:19:33 AM »
Sub $15 now.
These are incredible days.

Oil is cheaper than water at 10c a litre lol.

If you take the view that the maximum downside is US$15 per barrel, and the chances of oil staying at $15 and not going above that forever is slim.... I'm asking myself why I'm not gobbling up as much oil as possible...

Just hit $11.44 as I type this.  The big fear right now is they are running out of places to store it, might have to pay people to take your oil at this rate.  What that does to the global economy noone knows.

The May contract apparently expires tomorrow.

My guess is that nobody has anywhere to put the oil and futures traders are dumping the contract because they really don't know what they would do if they are still holding when the contract settles and end up getting assigned the oil.

June contract (still a month left to go) is at $23/barrel. May contract (one day left to go) now down to $10/barrel and may hit single digits before the end of the day. 

Edit: contract closing tomorrow now below $8/barrel $5/barrel and continuing to drop.
« Last Edit: April 20, 2020, 11:14:22 AM by maizeman »

bwall

  • Pencil Stache
  • ****
  • Posts: 834
Re: Oil at $23
« Reply #72 on: April 20, 2020, 12:06:43 PM »
Oil now at under $1.00 per barrel, trading at 77 cents.

It can still drop another 90%.

bwall

  • Pencil Stache
  • ****
  • Posts: 834
Re: Oil at $23
« Reply #73 on: April 20, 2020, 12:08:11 PM »
Oil now at under $1.00 per barrel, trading at 77 cents.

It can still drop another 90%.

Just hit 12 cents. I think it's going negative before the day is over. It's only 2 p.m. now.

Alternatepriorities

  • Pencil Stache
  • ****
  • Posts: 789
  • Age: 39
  • Location: Alaska
  • Engineer, explorer, investor
    • Alternate Priorities
Re: Oil at $23
« Reply #74 on: April 20, 2020, 12:30:25 PM »
At this point it might be worth investing in 55 gallon drums... I used to live in a weird little place that could only be reached by air or river and the local fuel company had a complete monopoly. It was actually about $3.50 a gallon cheaper to buy a drum, fill it with fuel, and ship it out on the barge than to buy locally. The barge company would ship empty drums up river for free, so the second year you saved an additional dollar per gallon. I never thought I would consider doing such a thing again since moving back to the road system... It's probably still not worth the time and effort.

bwall

  • Pencil Stache
  • ****
  • Posts: 834
Re: Oil at $23
« Reply #75 on: April 20, 2020, 12:45:03 PM »
Oil now at under $1.00 per barrel, trading at 77 cents.

It can still drop another 90%.

Just hit 12 cents. I think it's going negative before the day is over. It's only 2 p.m. now.

Yep. Just saw it at -35 dollars. Did I see that correctly? WTH, right?

maizefolk

  • Magnum Stache
  • ******
  • Posts: 4813
Re: Oil at $23
« Reply #76 on: April 20, 2020, 12:53:59 PM »
Currently shows up as approximately -$7/barrel for me.

We're definitely out of storage and down 140% from the opening price. Never thought I'd see that happen.

hodedofome

  • Handlebar Stache
  • *****
  • Posts: 1387
  • Age: 40
  • Location: Texas
Re: Oil at $23
« Reply #77 on: April 20, 2020, 01:02:25 PM »
Oil now at under $1.00 per barrel, trading at 77 cents.

It can still drop another 90%.

Just hit 12 cents. I think it's going negative before the day is over. It's only 2 p.m. now.

Yep. Just saw it at -35 dollars. Did I see that correctly? WTH, right?

You are correct. May contract went to -$40.32 on my screen. Now at -$26.58.

I am mostly a trend follower so I went short oil (via long SCO) last week. Didn't think I'd see a gain like this so quick. I sold off half just now.

vand

  • Handlebar Stache
  • *****
  • Posts: 1055
  • Location: UK
Re: Oil at $23
« Reply #78 on: April 20, 2020, 01:27:29 PM »
At least it blows away the argument that short sellers can only ever profit to 100% of the downside

kenmoremmm

  • Pencil Stache
  • ****
  • Posts: 525
Re: Oil at $23
« Reply #79 on: April 20, 2020, 01:43:33 PM »
so for those of you in the know (as much as practical): what's the upcoming play? what are you buying/shorting/etc?

maizefolk

  • Magnum Stache
  • ******
  • Posts: 4813
Re: Oil at $23
« Reply #80 on: April 20, 2020, 01:51:30 PM »
I'm surprised there hasn't been more movement in the price of the June WTI contract.

If I were holding an asset that might go to zero, and now I knew there was a risk it might go to negative -200% can cost me a lot more money than I spent to buy it, I'd be trying to unload it right now for any price >$0.

Then again, there's a reason I'm not a professional (or amateur) futures trader.

Alternatepriorities

  • Pencil Stache
  • ****
  • Posts: 789
  • Age: 39
  • Location: Alaska
  • Engineer, explorer, investor
    • Alternate Priorities
Re: Oil at $23
« Reply #81 on: April 20, 2020, 02:10:28 PM »
At what point do people start to "buy" oil just to set it on fire?

J Boogie

  • Handlebar Stache
  • *****
  • Posts: 1357
Re: Oil at $23
« Reply #82 on: April 20, 2020, 02:11:56 PM »
My friend is buying USO.

I'm buying TNP. Tanker company. Along with a couple others to diversify.

I don't know if I want to buy cheap oil. But I do know there's plenty of cash out there and plenty of speculators who will buy and they'll need somewhere stable to store it while they wait for covid lockdowns to ease up and people travel again.





bwall

  • Pencil Stache
  • ****
  • Posts: 834
Re: Oil at $23
« Reply #83 on: April 20, 2020, 02:15:15 PM »
I'm surprised there hasn't been more movement in the price of the June WTI contract.

If I were holding an asset that might go to zero, and now I knew there was a risk it might go to negative -200% can cost me a lot more money than I spent to buy it, I'd be trying to unload it right now for any price >$0.

Then again, there's a reason I'm not a professional (or amateur) futures trader.

Agreed.

Makes no sense. I'd be dumping the June tomorrow if I were long them today.

kenmoremmm

  • Pencil Stache
  • ****
  • Posts: 525
Re: Oil at $23
« Reply #84 on: April 20, 2020, 02:29:44 PM »
forgive me for my naivety here:
1. if you buy an ETF, say USO, and put in $1k, is the most you can lose $1k? it's not like a short where you can really get it handed to you, right?
2. is there an ETF or stock or other fund that is currently negative in value, like today's current price point on a barrel of oil?
3. if the answer to #2 is yes, how do gains work? let's say you bought "oil" at $-37, and then eventually it goes up to $40, do you just make $77? or, is there some dividing by zero or negative multiplier involved?

i hate oil and the impacts on the world. but i can't help but think this is a once in a lifetime bargain on it. i mean, buy and hold long enough and you should come out way ahead when things stabilize. we all know that pumped quantities will be reduced to meet storage limitations. and, demand will pick up, sometime in the next 2-12 months. how can this not go up?

J Boogie

  • Handlebar Stache
  • *****
  • Posts: 1357
Re: Oil at $23
« Reply #85 on: April 20, 2020, 02:48:23 PM »
forgive me for my naivety here:
1. if you buy an ETF, say USO, and put in $1k, is the most you can lose $1k? it's not like a short where you can really get it handed to you, right?
2. is there an ETF or stock or other fund that is currently negative in value, like today's current price point on a barrel of oil?
3. if the answer to #2 is yes, how do gains work? let's say you bought "oil" at $-37, and then eventually it goes up to $40, do you just make $77? or, is there some dividing by zero or negative multiplier involved?

i hate oil and the impacts on the world. but i can't help but think this is a once in a lifetime bargain on it. i mean, buy and hold long enough and you should come out way ahead when things stabilize. we all know that pumped quantities will be reduced to meet storage limitations. and, demand will pick up, sometime in the next 2-12 months. how can this not go up?

I don't know the particulars, but no, you cannot lose more than your outlayed investment when you invest in an oil or any etf, even leveraged ones.

I'm not so sure this is the once in a lifetime bargain. Oil producers and speculators have a cost of storing this low demand commodity. The storage infrastructure that isn't limited to oil will have an opportunity cost of storing oil when it could be storing something more profitable. This will mean oil barrels will be given away so this storage infrastructure can become productive again, which is especially a factor if this infrastructure is leased or not owned outright.

marty998

  • Walrus Stache
  • *******
  • Posts: 7038
  • Location: Sydney, Oz
Re: Oil at $23
« Reply #86 on: April 20, 2020, 03:58:34 PM »
My post just up there didn't age well.

Went to bed, woke up just now. Apparently economics broke.

ChpBstrd

  • Handlebar Stache
  • *****
  • Posts: 2313
Re: Oil at $23
« Reply #87 on: April 20, 2020, 09:33:56 PM »
If anyone had a place to take physical delivery, they could buy at $10 today and lock in the $23 price to sell it next month. These prices tell us the top is in, as in the top of the storage tanks! Anyone with spare capacity would be all over arbitraging that deal, but thereís no one left.

Meanwhile demand will continue to crater. No airlines, no school busses, no cruising, reduced commuting...

I would need to look into whether USO is affected by such severe contango.

kenmoremmm

  • Pencil Stache
  • ****
  • Posts: 525
Re: Oil at $23
« Reply #88 on: April 20, 2020, 09:36:25 PM »
but, doesn't it seem apparent that over most of recent history, USO should be at least $11/share? and that with today's $3.75/share, you're looking at a performance that should trounce general market returns until things return to "normal"?
https://finance.yahoo.com/quote/Uso?ltr=1

ChpBstrd

  • Handlebar Stache
  • *****
  • Posts: 2313
Re: Oil at $23
« Reply #89 on: April 21, 2020, 08:10:45 AM »
Most ETFs that use futures contracts or options have a disclaimer in the prospectus about how results will deviate from the underlying assetís price. This is due to the inefficiencies of rolling contracts, paying bid-ask spreads, approximating durations by bridging across futures with different maturities, management fees, contango/backwardizarion, overnight price moves, time decay, volatility, changes in interest rates, etc. Some prospectus disclaimers day the instrument should not be relied to track prices for longer than a day.

So if the plan is to buy USO or similar and hold for 1-5 years until prices recover, that may or may not work for a couple dozen reasons.

J Boogie

  • Handlebar Stache
  • *****
  • Posts: 1357
Re: Oil at $23
« Reply #90 on: April 21, 2020, 09:07:57 AM »
And that's it, no more buying USO. They closed it. Probably should have closed it a while ago.

kenmoremmm

  • Pencil Stache
  • ****
  • Posts: 525
Re: Oil at $23
« Reply #91 on: April 21, 2020, 10:13:29 AM »
i ended up jumping in on XLE for about $1k. first time buying an ETF or anything outside of an index fund. time will tell.

ice_beard

  • Stubble
  • **
  • Posts: 165
  • Location: East Bay, CA
Re: Oil at $23
« Reply #92 on: April 21, 2020, 10:34:09 AM »
I woulda just put that $$ on something like TOT.  The oil that went negative is all coming from the US and ETFs like USO are the reason for it.  All those paper holdings and no where to actually put that oil.  Can't believe the price held up as long as it did.  Were none of those holders paying attention?? 

Who wants to bet the Texas RR commission does hold their nose and actually impose a significant mandatory cut?  It seems like the only reasonable option.   

ChpBstrd

  • Handlebar Stache
  • *****
  • Posts: 2313
Re: Oil at $23
« Reply #93 on: April 21, 2020, 12:36:06 PM »

joleran

  • Bristles
  • ***
  • Posts: 305
Re: Oil at $23
« Reply #94 on: April 21, 2020, 01:51:50 PM »
At what point do people start to "buy" oil just to set it on fire?

Environmental impacts would probably limit this strat to third world nations where you could bribe your way though any obstacles.  Good business opportunity though!

"Some people just want to watch the world burn" was never so literal :D

magnet18

  • Bristles
  • ***
  • Posts: 321
Re: Oil at $23
« Reply #95 on: April 21, 2020, 02:26:36 PM »
At what point do people start to "buy" oil just to set it on fire?

Environmental impacts would probably limit this strat to third world nations where you could bribe your way though any obstacles.  Good business opportunity though!

"Some people just want to watch the world burn" was never so literal :D

I live in the middle of BFE, at $-40/barrel  I'm sure somebody is trying to figure out how to modify their heating oil stoves to crude oil stoves

(Eta, mostly ptf
I've seen crude in person, i don't think that *actually* feasible, plus it smells terrible)
« Last Edit: April 21, 2020, 02:28:18 PM by magnet18 »

Alternatepriorities

  • Pencil Stache
  • ****
  • Posts: 789
  • Age: 39
  • Location: Alaska
  • Engineer, explorer, investor
    • Alternate Priorities
Re: Oil at $23
« Reply #96 on: April 21, 2020, 03:02:05 PM »
At what point do people start to "buy" oil just to set it on fire?

Environmental impacts would probably limit this strat to third world nations where you could bribe your way though any obstacles.  Good business opportunity though!

"Some people just want to watch the world burn" was never so literal :D


I live in the middle of BFE, at $-40/barrel  I'm sure somebody is trying to figure out how to modify their heating oil stoves to crude oil stoves

(Eta, mostly ptf
I've seen crude in person, i don't think that *actually* feasible, plus it smells terrible)

I'll grant the environmental impact would be awful. I didn't say it was a good idea, mostly commenting on how bizarre it is. I do hope we're stuffing the strategic reserve full at negative prices... I also hope the price doesn't stay low long after the viral panic is over the sake of the planet as well as my state's budget.

magnet18

  • Bristles
  • ***
  • Posts: 321
Re: Oil at $23
« Reply #97 on: April 21, 2020, 07:09:42 PM »
At what point do people start to "buy" oil just to set it on fire?

Environmental impacts would probably limit this strat to third world nations where you could bribe your way though any obstacles.  Good business opportunity though!

"Some people just want to watch the world burn" was never so literal :D


I live in the middle of BFE, at $-40/barrel  I'm sure somebody is trying to figure out how to modify their heating oil stoves to crude oil stoves

(Eta, mostly ptf
I've seen crude in person, i don't think that *actually* feasible, plus it smells terrible)

I'll grant the environmental impact would be awful. I didn't say it was a good idea, mostly commenting on how bizarre it is. I do hope we're stuffing the strategic reserve full at negative prices... I also hope the price doesn't stay low long after the viral panic is over the sake of the planet as well as my state's budget.

If the reserve wasn't full, I'm pretty sure prices wouldn't be negative

Pretty sure the reserves are all full up, all across the planet

ice_beard

  • Stubble
  • **
  • Posts: 165
  • Location: East Bay, CA
Re: Oil at $23
« Reply #98 on: April 21, 2020, 09:52:33 PM »
It's helpful to remember that not all oil went negative, just for one region in the US, the one that sells West Texas Intermediate.  Yes, this was freaky but not all oil went negative.  The same contracts that were selling for -$40 yesterday ended up selling for $10 today, the last day of the contract period.  The next months contracts are selling cheap and because there is a crap ton of oil around and not much use for it. 
Again, not all oil is selling for $-40 or even close to that.  These headline grabbing numbers were some desperate people trying to get rid of some contracts that were about to expire.  If the holders of these contracts do not sell them, they MUST physically take possession of X number of barrels of oil in the contracts they hold.  So rather than a bunch of office people trying to figure out how they were going to take possession of, move and store hundreds of thousands of barrels of oil, they sold them, or rather, they paid someone to take their oil from them!  This is getting even more difficult as there is literally no storage left to store the stuff.  All the tanks are nearing full and the oil keeps flowing.

Strange indeed.  Do not buy USO.   

frugalnacho

  • Magnum Stache
  • ******
  • Posts: 4216
  • Age: 37
  • Location: Madison Heights, Michigan
Re: Oil at $23
« Reply #99 on: April 21, 2020, 11:00:48 PM »
At what point do people start to "buy" oil just to set it on fire?

Environmental impacts would probably limit this strat to third world nations where you could bribe your way though any obstacles.  Good business opportunity though!

"Some people just want to watch the world burn" was never so literal :D

I live in the middle of BFE, at $-40/barrel  I'm sure somebody is trying to figure out how to modify their heating oil stoves to crude oil stoves

(Eta, mostly ptf
I've seen crude in person, i don't think that *actually* feasible, plus it smells terrible)

If that was even possible why would anyone have bothered to refine it in the first place? This is a weird price inversion due to extenuating circumstances, but I would guess the normal economics of the situation would be that crude would be cheaper than the refined oil.  How could that not be true? How could the refiners make any profit if it wasn't true?