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FOR 1st time ever, OIL FUTURES TURN NEGATIVE. Tomorrow, trading in oil for 5/20 delivery expires. Whomever holds that contract must take delivery of that oil on 5/20. Right now, because of NO demand/place to store it, BUYERS ARE PAYING SELLERS NOT TO DELIVER THE OIL
The issue is not that there is no value to the oil. Rather to take delivery of it on 5/20, you have to be able to store it, and there is no available storage space in the US
As my partner @SRuhle points out, West Texas Intermediate Light Sweet Crude oil for delivery on 6/20 Is trading above $20, which means traders assume that both demand and capacity will increase
Remember that owning an oil contract when trading expires COMPELS you to take physical delivery of that oil, so people who own those contracts are basically PAYING other people to take the contract - and the obligation to take delivery of the oil
BREAKING: A barrel of crude for delivery one month from today is now NEGATIVE $35. In other word, someone who owns the right to that oil will pay person who has the oil $35/barrel NOT to deliver it to them on May 20 (oil contracts expire once a month for delivery once a month)
Oil is, today, a hot potato, except in addition to throwing the potato YOU OWN back at the person from who you just bought it, you’re ALSO PAYING them NOT to toss it back to you.
Something to remember: OIL itself is not negative. This is a logistics issue: collapse in demand has resulted in ZERO storage capacity IN America or offshore. Contracts for oil for delivery a month later, in June, is still trading above $20/bbl
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Ali Velshi
@AliVelshi
1/7
I have a friend, @PeterDiamandis, who says that “the day before something is truly a breakthrough, it's a crazy idea.” And crazy ideas are very risky to attempt. But here's one crazy idea that may be worth attempting now: Universal Basic Income. #velshi #UBI
2/7
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3/7
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Ali Velshi
@AliVelshi
1/6
Since we first learned of the potential scope of coronavirus, I've argued in favor of big, sweeping change because often, our moments of crisis are the moments in which we can make the greatest, long lasting difference. #velshi
2/6
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3/6
A few years ago, a $12 an hour minimum wage seemed radical. Now the call is for $15 an hour—an amount that people call socialist. $15 an hour is $30,000 a year. A socialist would be embarrassed that their system allowed people to earn so little. #velshi
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Ali Velshi
@AliVelshi
1/5
At least 17 million people are out of work. Millions of others are furloughed, facing salary cuts or cuts in their hours. In this time of need, banks & credit reporting agencies need to take a uniform & generous approach to their customers.
2/5
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3/5
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