4 ms·
It is a question of whether it will cost more to store the oil than it does to "sell" it at a loss. That said, I doubt many producers truly sold for negative p
by goodcanadian 6y ago
It is a question of whether it will cost more to store the oil than it does to "sell" it at a loss.
That said, I doubt many producers truly sold for negative prices. The negative prices were a commodities market effect where traders were required to pay to offload their futures contracts in order to not take delivery of the oil. In other words, I suspect the commodities traders bore the brunt of the negative pricing.
- bob33212 6y agoWouldn't a refinery or storage facility in a country with lax regulations just burn their existing stockpile and take some off this oil at a negative price
- gen3 6y agoI guess the issue with this is that it’s a physical item being delivered to the US, not any country. I’m not sure what the laws are when it comes to burning stuff off in the US.
- perl4ever 6y ago"traders were required to pay to offload their futures contracts in order to not take delivery of the oil" That doesn't seem accurate, since the expiring futures rebounded to a positive value the next (and final) day, right? It seems more like people were panicking and thought they had to unload at any price, but it was simply an error. Although I'm not knowledgeable about it.
- toast0 6y agoIf you were a speculative trader, and absolutely didn't want to have any oil delivered to you, it makes sense to sell at close the day before the futures become binding. You could wait until the last day, but you'd have a big problem if the market was closed that day becomes of unexpected circumstances.