Almost below a dollar. Holy shit

What does this mean long term? I'm completely ignorant on this kinda thing.

posted by justincredible

What does this mean long term? I'm completely ignorant on this kinda thing.

S&L probably knows more, but this is just for the May futures. June is still above $20.

posted by justincredible

What does this mean long term? I'm completely ignorant on this kinda thing.

It means we're about to see how much of each gallon is determined by fixed rates of taxation as opposed to barrel prices.

This thread gives some explanation. 

https://twitter.com/gilbeaq/status/1252293724215762950?s=21

posted by justincredible

What does this mean long term? I'm completely ignorant on this kinda thing.

I don’t know how much of a long-term effect this shows, as these prices are only short term (May) futures contracts. In the short term, it means drillers aren’t drilling, and will need to find other ways to make money. These companies better have a lot of cash on hand or else you’ll see bankruptcies. 
It also means Russia, Saudi Arabia, and countries that rely on oil exporting are completely fucked. Particularly Russia who really doesn’t export anything else. 
China is a clear winner here. They don’t drill any oil, so they’re only importing their oil and right now are getting it at an incredible rate. 
 

Also, and this could be wrong as there are a lot of abnormalities in the market right now, but I doubt this effects your cost of gas price at the local gas station. Gas stations aren’t going to drop their cost to .50 cents a gallon because they’re getting it for practically nothing. They’re hurting too, and aren’t going to just give it away to those who are still buying right now.  
 

The sudden crash in demand has led to a major storage problem; there is nowhere to physically put the oil right now, so the prompt month (May) has cratered. I look for June to also drop from $22, probably into the mid-teens, until supply gets cut more and some demand comes back from air traffic and beyond.

Got it. Thanks. 

posted by O-Trap

It means we're about to see how much of each gallon is determined by fixed rates of taxation as opposed to barrel prices.

posted by SportsAndLady

I don’t know how much of a long-term effect this shows, as these prices are only short term (May) futures contracts. In the short term, it means drillers aren’t drilling, and will need to find other ways to make money. These companies better have a lot of cash on hand or else you’ll see bankruptcies. 
It also means Russia, Saudi Arabia, and countries that rely on oil exporting are completely fucked. Particularly Russia who really doesn’t export anything else. 
China is a clear winner here. They don’t drill any oil, so they’re only importing their oil and right now are getting it at an incredible rate. 
 

Also, and this could be wrong as there are a lot of abnormalities in the market right now, but I doubt this effects your cost of gas price at the local gas station. Gas stations aren’t going to drop their cost to .50 cents a gallon because they’re getting it for practically nothing. They’re hurting too, and aren’t going to just give it away to those who are still buying right now.  
 

Yeah, at least for the short term, it looks like now the price of gas will be the federal gas tax plus whatever is your state and local gas tax. 

On a related note, nearly every state funds their transportation projects through gas tax and toll revenue. The lack of gas being sold and the lack of people on the road way is killing transportation projects now. 

I know Ohio, PA, Virginia, and North Carolina have pretty much scaled back all of their transportation projects. North Carolina went so far as to cancel most of all the projects that were going to be awarded this year. 

Sure companies are enjoying less traffic to get the current roadway projects done, but the pipeline of work is drying up now. 

The long touted infrastructure bill from Trump would be great right now....

Now at NEGATIVE $11. 

Frame the screen shots for posterity.

Y'all can fill my garage with barrels at $11 a pop.

posted by justincredible

Y'all can fill my garage with barrels at $11 a pop.

The barrels will cost more than what’s inside. 

If the “China created this in a lab as a weapon” conspiracy theorists weren’t loud before, they’re practically screaming now. 
 

The only question was “but why would they do it?” And it seems like now they have their answer. Collapse other countries economies by attacking a commodity that they don’t export. 

Hit NEGATIVE $40

Hopefully the June contract fares better, if we can get things rolling soon.

Can someone explain to me how a negative value even works?

posted by O-Trap

Can someone explain to me how a negative value even works?

It stops production

posted by SportsAndLady

It stops production

Well yeah.  But regarding what's already in existence, how does that work?

posted by O-Trap

Well yeah.  But regarding what's already in existence, how does that work?

Price is just an arbitrary number. It can get worse than zero because zero is an arbitrary number. 

posted by SportsAndLady

Price is just an arbitrary number. It can get worse than zero because zero is an arbitrary number. 

Ah, okay.  I never realized it was completely arbitrary.  I always thought it correlated to something in an objective way.

posted by O-Trap

Ah, okay.  I never realized it was completely arbitrary.  I always thought it correlated to something in an objective way.

Arbitrary in a financial sense. Like the Dow being at 23,000 is arbitrary. Traders on a commodity market set the price of oil futures by their bids/asks. It’s not actually the price of a barrel of oil in present day, it’s a forecast of future trading price. 
 

posted by O-Trap

Well yeah.  But regarding what's already in existence, how does that work?

You're basically paying people to take it off your hands because you have nowhere to put it.

It's supply and demand.  There are no buyers, so sellers are paying people to take it.  Not every well has an off switch, I don't think.

But it is a contract that trades, so there is a buyer and a seller.  Today is the last day for the May contract, and you have producers essentially paying to have the oil taken off their hands. Most likely a one-day anomaly, but we’ll see what the June trading looks like.

posted by SportsAndLady

Crude oil down over FIFTY percent today. It’s under $9 a barrel. Crazy, crazy crash of the oil industry. 
...And I just bought a ton of oil drilling stocks. Buy low

Could be a great buy, assuming they don't go bankrupt before prices rebound.  Sounds like you looked at debt and cash, though.  Finding their break-even price per barrel is probably a lot tougher - oil stays below $25 for a year and that's going to bankrupt a lot of drillers.

posted by gut

Could be a great buy, assuming they don't go bankrupt before prices rebound.  Sounds like you looked at debt and cash, though.  Finding their break-even price per barrel is probably a lot tougher - oil stays below $25 for a year and that's going to bankrupt a lot of drillers.

I love DO. I have a bit too much of them, lol. 
They have enough cash to last, and just restructured their debt. If oil comes back, which it should once we reopen and planes can start flying again, I should get paid out nicely on that one.