Sold Out - Negative oil prices. ???

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Batman

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#2472598 28-Apr-2020 10:07

jpoc:
A lot of people have pointed out that this event is the first time that an oil price (of any description) has turned negative.

This has been spun as an indicator of how extreme the current situation is.

It is actually, an indication of the fact that environment protection legislation has some teeth.

There have been occasions in the past (great depression for one) when assorted oil prices have headed towards negative. In those times, the solution was simple. Just set the surplus oil on fire.

At least they did not do it this time.

Omg now that you mentioned it I actually recall that happening. It wasn't that long ago actually.

frankv

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#2472704 28-Apr-2020 11:08

Batman:

A lot of people have pointed out that this event is the first time that an oil price (of any description) has turned negative.

Did any oil actually get traded at negative prices? The one example I looked into, it was a negative offer from some oil purchasing company for a particularly sulfur-high oil. I don't know whether any oil actually got sold (is sold the right word?) under those terms. In which case, the actual oil price wasn't negative.

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#2472747 28-Apr-2020 12:23

Good point. I know that countries were buying up but then I read that they had to pay for storage by a third party as not many people who bought the oil had storage.

Did China buy much? They are the one if anybody, who will need a lot of it.

Handsomedan

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#2472753 28-Apr-2020 12:27

I'm still not seeing the reduction in cost I would expect based on the plummeting oil prices.

Are we to believe that this is as low as it goes? Not that long ago (when oil prices were higher) that petrol was under $1 a litre.

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jpoc

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#2472773 28-Apr-2020 13:11

frankv:

Did any oil actually get traded at negative prices?

Not a lot but there was some trading at those negative prices. Some people made money by moving oil onto otherwise unused rail wagons which are now parked in otherwise unused sidings.

At 30,000 us gallons per rail wagon you would be getting paid $15,000 US for every load. That should be enough to lease the wagon and parking for quite some time.

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