Thread by @iamkoshiek

The oil price in 90 seconds! [THREAD]

1. Most popular grades of oil quality are West Texas Intermediary (WTI) & Brent North Sea Crude (Brent)

2. Brent is a blend from of 15 oil fields in the North Sea. It's 2/3rds of world production. Benchmark for Africa, Europe + Middle East

3. WTI is the benchmark for North America. WTI trades on exchanges in Chicago & New York

4. You can buy a contract for oil in the future. Think of UberEats, you want Nandos next Thurs night. You pay now & it gets delivered next week. This is called a futures contract

5. Thursday comes around & you already had dinner. Fuck. But you ordered Nandos! There's no space! This is EXACTLY what happened in the oil market today

6. New York WTI futures contracts expired at -$37 today. Yes, negative. Wait, hold up. How is the oil price negative?! Read on

7. Simple. You have to PAY someone to take it from you. If you don't, you have to accept delivery. Loosely, a producer will pay up to $40 for you to take a million barrels of oil.

8. Hey let me take some!! No, that excludes the freight & shipping costs. Also your house is small.

9. Brent crude isn't a guy who sends you pervy texts on Tinder. Brent is roughly $21 a barrel right now. Some of this has to do with OPEC (a cartel of oil producing nations) deciding to limit supply.

10. Is cutting supply enough? No, it's demand driven thanks largely to the Rona

11. What will happen tomorrow?! Firstly, tomorrow the prices won't be negative. You look towards the next set of contracts (June expiry).

12. Will the petrol price come down? Yes but our ZAR is weak and there's a ton of taxes + levies AND we're less exposed to WTI.

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