Oil is now trading in the negative 20/04/2020

landlord

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As I write this WTI crude oil is tanking 20/04/2020 and has just traded in the negative. Currently the may contract is $ -6.7 per barrel....incredible.
perhaps someone come and explain to me how this is possible.
Would I be right in saying that the refiners are paying people to take it away because demand has tanked, storage has run out and from what I am reading it is cheaper to pay someone to take it away then shut down the well.....

update....market just closed at $ -37.63 per barrel.
representing an almost 300% decline. A flash crash at the end of trading which even CNBC are struggling to explain..... “A broken market” is their only explanation so far.
 
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There are other dynamics at play. Some major commodity traders went bust and the banks are closing out/liquidating positions.
 
The relevant may contract expires tomorrow. If you were long those futures you have to accept delivery of physical oil. The problem is that storage facilities are full, the market already has a surplus of supply so people holding the contracts were dumping them.

The original producers originally sold up in the 20's. And the contracts for the later months are also more normal. So it was a particular set of circumstances that led to negative prices... Essentially people paying someone to take oil off them

But it doesn't bode well for prices generally. The storage issue is local... Oklahoma is where US futures deliver to. But if demand is wiped out and storage is starting to fill up then producers are going to have to slash production soon or this gets repeated.
 
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