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

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.

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.

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.

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).

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?

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.

I see 19 oil tanker ships anchored outside the LA Harbor. Bets on if they have offloaded yet? Or are they floating storage?

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.

:
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

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.

Shouldn't the US buy now and fill reserves.

RC2006 says

Shouldn't the US buy now and fill reserves.

I think Orange Monster is doing exactly that

US fracking producers are basically done for.

The upside is that this might really destabilize the Islamic Dictatorship of Saudi Arabia.

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.

Martinez shut down their refinery.
https://www.sfgate.com/news/bayarea/article/Marathon-Refinery-To-Suspend-Production-Due-To-15210831.php

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.

https://www.autoblog.com/2020/04/20/oil-price-crash-no-storage-space/

https://finance.yahoo.com/quote/CL=F

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.

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.

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.