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May crude oil futures closed at -38.45. That's MINUS 38.45!

By Automan Empire follow Automan Empire   2020 Apr 20, 2:03pm 395 views   21 comments   watch   nsfw   quote   share    


The energy market is running into the problem of long term supply contracts running into full storages due to low demand. Radio news was talking about coal power plants running out of room for all the coal pouring in. Then today crude futures closed at -38.45!

Small data point, I live in LA county and travel frequently to the boundary of Kern County, a big historic oil producing area. Usually pump prices are 10-20c less than LA, but this was upside down by 30-40c a gallon this weekend, with Kern prices apparently not merely falling later but actively going UP.
1   rocketjoe79   ignore (1)   2020 Apr 20, 2:17pm     ↓ dislike (0)   quote   flag      

CNBC Futures show Oil as a negative. Not sure how this can be?
2   WookieMan   ignore (5)   2020 Apr 20, 2:27pm     ↓ dislike (0)   quote   flag      

rocketjoe79 says
CNBC Futures show Oil as a negative. Not sure how this can be?

There's too much oil. Not a market I understand at all, but what I've heard is that they don't have places to store what is being pumped right now. It goes negative because they have to pay people to take the oil. Places like Saudi Arabia and Iran burn if they're not pumping oil. So they'll pump it at a loss so their regime doesn't get overthrown.

Again, not a market I understand, but that's my guess.
3   Hircus   ignore (0)   2020 Apr 20, 3:05pm     ↓ dislike (0)   quote   flag      

if the prices will stay close to zero for a little while, why not just make a man made lake of oil to store it? it should be much easier and cheaper to pump out of a lake than a drill rig.

maybe these neg prices are just a snap back price reaction, and will only last a very short period of time until they adjust how many tankers they send per wk.
4   Booger   ignore (7)   2020 Apr 20, 3:11pm     ↓ dislike (0)   quote   flag      

rocketjoe79 says
CNBC Futures show Oil as a negative. Not sure how this can be?


I don't understand it either.
But my rudimentary understanding is that one simply does not turn off and in oil wells. That may depend on the type of well though. That and oil is purchased well in advance and put in tankers that take weeks to cross the ocean. So by the time it gets there, it needs a place to go to. If no storage, then it stays in the tanker until storage is available.

Also, gasoline usage is down, but diesel usage is only down a little, so there is a huge imbalance there as well.

Hopefully demand will ramp up pretty quickly soon enough to keep this from becoming an even bigger problem.
5   WookieMan   ignore (5)   2020 Apr 20, 3:21pm     ↓ dislike (0)   quote   flag      

Booger says
So by the time it gets there, it needs a place to go to. If no storage, then it stays in the tanker until storage is available.

They probably can't even dock all the fucking ships right now that are out there. Harbors and ports were designed with the movement of ships in mind. Not having practically all of them parked at the same time. Need to open up and say fuck it at some point.

The only thing we all have in common is we gonna die. Stop being so afraid (not you Booger - people in general).
6   Tenpoundbass   ignore (14)   2020 Apr 20, 3:24pm     ↓ dislike (0)   quote   flag      

Time to open drive through everything worldwide.

As long as they are paying us to fill up our tanks.

We take gas and they give us money, is that how this thing works?
7   WookieMan   ignore (5)   2020 Apr 20, 3:42pm     ↓ dislike (0)   quote   flag      

Hircus says
if the prices will stay close to zero for a little while, why not just make a man made lake of oil to store it?

Hard enough to put a pipe in the ground that uses little to no emissions for transmission of oil outside of tanker or truck (which emit a ton). The Green New Deal people might physically attack you for that thought.
8   Shaman   ignore (2)   2020 Apr 20, 3:53pm     ↓ dislike (0)   quote   flag      

I see 19 oil tanker ships anchored outside the LA Harbor. Bets on if they have offloaded yet? Or are they floating storage?
9   rocketjoe79   ignore (1)   2020 Apr 20, 4:01pm     ↓ dislike (0)   quote   flag      

WookieMan says
Hircus says
if the prices will stay close to zero for a little while, why not just make a man made lake of oil to store it?

Hard enough to put a pipe in the ground that uses little to no emissions for transmission of oil outside of tanker or truck (which emit a ton). The Green New Deal people might physically attack you for that thought.


Already done. Strategic oil reserve at 613mmbbls of 715mmbls cap.
10   marcus   ignore (12)   2020 Apr 20, 4:26pm     ↓ dislike (0)   quote   flag      

:
It would be a great time to own a few storage tanks. Interesting construction task. Can you "print" some big tanks out in bumble fuck in a couple weeks time ?

I'm guessing it can be done in a month. Maybe just dig some big holes and put liners down. If the crude is -38, and is worth 20, are they really saying that they have a $58/barrel storage problem ?

Oh, this is a contract that expires tomorrow. People that couldn't take delivery were forced out of their long possitions at prices they thought were impossible.

Imagine being a genius that bought at zero, or slightly negative, thinking there was no downside. OUCH ! That's gotta hurt. Now they have to explain that to their trust fund parents.

Caveat emptor
11   FuckTheMainstreamMedia   ignore (7)   2020 Apr 20, 4:49pm     ↓ dislike (0)   quote   flag      

But of course fucking California can’t fall below $2 a gallon because of all the taxes and stupid add ons in the refining process. The entire country gets 1990 priced gas and we get the strap on sans lube once again.
12   RC2006   ignore (2)   2020 Apr 20, 5:08pm     ↓ dislike (0)   quote   flag      

Shouldn't the US buy now and fill reserves.
13   rd6B   ignore (1)   2020 Apr 20, 5:18pm     ↓ dislike (0)   quote   flag      

RC2006 says
Shouldn't the US buy now and fill reserves.

I think Orange Monster is doing exactly that
14   Patrick   ignore (1)   2020 Apr 20, 5:18pm     ↓ dislike (0)   quote   flag      

US fracking producers are basically done for.

The upside is that this might really destabilize the Islamic Dictatorship of Saudi Arabia.
15   rd6B   ignore (1)   2020 Apr 20, 5:20pm     ↓ dislike (0)   quote   flag      

marcus says
It would be a great time to own a few storage tanks.

very good observation @Marcus - some Texan friends of mine are making out as bandits as they own oil storage tanks. Another friend is very unhappy, as he tore down a few tanks last year to sell his property, which now can not be sold.
17   FuckCCP89   ignore (5)   2020 Apr 20, 5:34pm     ↓ dislike (0)   quote   flag      

Patrick says
US fracking producers are basically done for.


They will be scooped up by bigger players in the field. The capacity is not going anywhere.
19   Booger   ignore (7)   2020 Apr 20, 6:15pm     ↓ dislike (0)   quote   flag      

marcus says
It would be a great time to own a few storage tanks. Interesting construction task. Can you "print" some big tanks out in bumble fuck in a couple weeks time


Probably not. Oil and other petroleum products need special containment stuff to contain spills.
20   Automan Empire   ignore (2)   2020 Apr 20, 7:18pm     ↓ dislike (0)   quote   flag      

In the 70s and early 80s, when the oil embargoes caused shortages and price spikes, there was a burgeoning industry in "fuel saver devices" that made bold double digit claims about their (usually nonexistent) gas saving ability. A running joke emerged that it would be dangerous to put 4 or 5 of these on the same car because you'd have to pull over every few miles to bail gas out of the tank.

Today's negative prices kind of undermine the hyperbole and implausiblity factors that are part of the basis of the humor there.
21   FuckCCP89   ignore (5)   2020 Apr 20, 7:24pm     ↓ dislike (0)   quote   flag      

I'm open to the idea of helping the oil industry by driving down my giant SUV to the nearest gas station and filling her up.... if they pay me $100.

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