Oil price -40 bucks

[Terry]

Can someone tell me how they can have negative price for a barrel of oil
I mean if the seller has to give me 40 bucks for me to buy their oil for free Why sell it 

[Fisherman]

They're trying to reduce the output, no where to store what they have already pumped out of the ground, so they put a negative number on there to avoid further pumping. 

[Terry]

But people bought ,I heard they filled every oil reserve storage place in the USA

so how do you pay -40 bucks 

[misfish]

https://www.nbcnews.com/business/markets/oil-prices-tumble-lowest-level-1980s-n1187716

[Terry]

That didn’t help me

i had heard all  that but it doesn’t answer my questions

i mean can I buy  50 barrels and store it in my tanker  truck. 
mans they pay me to 2000 bucks to buy it

Edited April 20, 2020 by Terry

[Crimsongulf]

I saw where Canada basically shut down all production.  More jobs gone, at least for now.

The oil situation had to come.  Very high production and a dramatic decrease in demand.

 

Just proves that supply and demand still rules all markets.

[Terry]

Same in USA 

trump has being doing what he could to keep usa oil companies going.  USA has become a major player in oil production with all the shale they are producing 

but that’s stopping 

[Woodsman]

A negative price basically = no production or sales.

When the better quality oils are selling quite low the lesser quality ones drop off the table.

[cisco]

18 minutes ago, Terry said:

That didn’t help me

i had heard all  that but it doesn’t answer my questions

i mean can I buy  50 barrels and store it in my tanker  truck. 
mans they pay me to 2000 bucks to buy it

Pumping operators who remove the crude oil from the ground are trying to keep pumping just to keep their operations going. Costs $ to shut down wells and lay workers off. By dropping to the point of paying processors to buy their crude the producers are hoping to tempt buyers to favor buying from them rather than their competition. But when it gets processed, shipped out, taxed, sold at a gas station there is lots of $ added to the price. You can bet that prices will be 'price fixed' to ensure profits at your gas station. Gov't won't ever step in to affect prices due to the huge tax revenue received by the provinces and the feds. MHO.  

[Crimsongulf]

In reality, we will probably be whining about the high price of oil in 18 months.

[cisco]

Oh and re 'shale' or fracking, this 'new invention' of US producers that ruptures underground water/oil veins to contaminate groundwater...... the Saudis and Russia were very unhappy the US changed laws enabling entry into the foreign market using this and then when the Russian/Saudi folks had an 'argument' over how much each would cut in production to raise world prices for more profit. So the Saudis flooded the market with oil and now they are getting a better arrangement with Russia. Meanwhile both were very happy the highly financed fracking industry was and is going broke due to the low oil prices. This happened about a month or so ago. 

US fracking is dying. Prices will stay low as demand craters, and the plandemic is largely responsible and the Saudis and Russia are happy their US fracking competition is, well, fracked.

Edited April 21, 2020 by cisco

[Crimsongulf]

The US is no longer dependent on any other country for energy.

 

Give it a year or two and the price will be back.

 

The US and Canada, well most of the non third world of the planet has an insatiable appetite for fossil fuel and it ain't changing anytime soon.

[OhioFisherman]

I think my son told me he filled up his truck yesterday,  97 cents a gallon.

[irishfield]

Think of it like Hydro One Terry.. Paying New York to take power at night and then charging us triple for it as Peak in the Day time!

[grimsbylander]

2 hours ago, Terry said:

That didn’t help me

i had heard all  that but it doesn’t answer my questions

i mean can I buy  50 barrels and store it in my tanker  truck. 
mans they pay me to 2000 bucks to buy it

In short, oil is traded in futures on a monthly contract schedule. This means oil producers agree to sell oil at a predetermined price on a set date each month. With no where to physically put the crude oil that’s already in the supply chain, (on route) the producers are literally paying traders to take the oil. A -$30 price per barrel does not necessarily mean a loss at the producers level. But having oil surpluses backlogged would be insanely expensive. 

[AKRISONER]

16 hours ago, irishfield said:

Think of it like Hydro One Terry.. Paying New York to take power at night and then charging us triple for it as Peak in the Day time!

my all time favourite...the ontario government figured out a way to pay to give our electricity away lol

[John Bacon]

On 4/20/2020 at 7:31 PM, Terry said:

That didn’t help me

i had heard all  that but it doesn’t answer my questions

i mean can I buy  50 barrels and store it in my tanker  truck. 
mans they pay me to 2000 bucks to buy it

Theoretically yes, but you may need another 50 or 60 thousand trucks to handle their minimum order 😉 

Now if happened to have a storage tank that can hold a full tanker ship full of oil located near a large port, this would have been a great opportunity.

  

[SirCranksalot]

On 4/20/2020 at 9:15 PM, Crimsongulf said:

The US is no longer dependent on any other country for energy.

 

 

And that is good for all of us, IMO

 

[dave524]

On 4/20/2020 at 6:59 PM, Terry said:

Can someone tell me how they can have negative price for a barrel of oil
I mean if the seller has to give me 40 bucks for me to buy their oil for free Why sell it 

It's hazardous waste if not used, proper disposal is probably more expensive. Basically they are giving it away and covering storage costs.

 

Edited April 22, 2020 by dave524

[OhioFisherman]

Too bad you can't prepay for a 1000 gallons of gas?

[SirCranksalot]

Here is what I got from my $$ guy.  FWIW--- if it makes any sense

 

Negative oil? The strange sight of negative oil prices after Monday's (April 20) late-day plunge in crude futures contracts has sparked a wider, cautious response in the equity market. A negative price for a barrel of oil may not make intuitive sense but is largely explained by the dynamics of the futures market.

Oil prices are usually referenced by the futures contracts for delivery of oil in the coming month. As these contracts near expiration, the prevailing price of crude oil typically "rolls forward" to the next month's contract with minimal change in price. The price of oil to be delivered for the May contract is what turned negative. That contract expires today (April 21), requiring delivery of that oil.

With oil oversupplied and very little storage anywhere, those futures contracts sold off sharply, with sellers willing to essentially get out of those obligations at extreme losses. With the May contract expiring, the June contract will become the prevailing price of oil, which is currently trading around $10 per barrel - low, but not negative.
 

[Crimsongulf]

[Old Ironmaker]

We often produced steel at a loss when the market was glutted by cheap Chinese and or Brazilian slabs. They weren't the only offshore players. We just stock piled billets and slabs knowing it could be finished after prices rebounded or sold it at a loss to keep our long time customers such as GM and Chrysler happy rather than to lose them forever to a different supplier using cheap offshore slabs they finished. The oil industry selling at a loss isn't unique in manufacturing. It's a tad more complicated than that as both the Canadian and US governments would get involved but tells the basic story in Readers Digest form.

Edited April 25, 2020 by Old Ironmaker