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Here Is The Full Explanation Behind Today’s Unprecedented Negative Oil Price

Business

Courtesy of IHSMarkit’s energy vice president Roger Diwan

How did you end up with negative oil prices today?  This happens when a physical futures contract find no buyers close to or at expiry.

Let me explain what that means:

A physical contract such as the NYMEX WTI has a delivery point at Cushing, OK, & date, in this occurrence May.  So people who hold the contract at the end of the trading window have to take physical delivery of the oil they bought on the futures market.  This is very rare.

It means that in the last few days of the futures trading cycle, (which is tomorrow for this one) speculative or paper futures positions start rolling over to the next contract. This is normally a pretty undramatic affair.

What is happening today is trades or speculators who had bought the contract are finding themselves unable to resell it, and have no storage booked to get delivered the crude in Cushing, OK, where the delivery is specified in the contract.

This means that all the storage in Cushing is booked, and there is no price they can pay to store it, or they are totally inexperienced in this game and are caught holding a contract they did not understand the full physical aspect of as the time clock expires.

The contract roll and liquidity crunch that made the extreme sell-off today possible but it DOESN’T necessarily represent futures market conditions: NYMEX June settled today at $21.13.

The June contract is not out of the woods either: today’s action indicate that physical oil markets at Cushing are not in good shape and that storage is getting very full.

A decline of over 15% in the June contract price points to real worries that the physical stress will continue to reverberate, and will force a lot more production shutdowns during May than the ones announced so far.

So today negative prices are the reflection of dire market conditions for producers, with the hope that demand restart before the middle of May and that the June contract does not face the same fate.

zerohedge



44 Comments on "Here Is The Full Explanation Behind Today’s Unprecedented Negative Oil Price"

  1. makati1 on Mon, 20th Apr 2020 7:35 pm 

    The oily crowd runs all out toward the production cliff and cannot turn fast enough to keep from going over. They saw it coming but greed blinded them. Couldn’t happen to a more deserving crowd! I hope negative numbers lasts all year until they are forced to shut all of the fraking wells in, and the tar sands and…

  2. whoa on Mon, 20th Apr 2020 7:47 pm 

    why no amputation of whitey supertard scientific supremacist “thunderf00t”.
    each of the charges carry amputation of all limbs and no prostetics allowed.
    #1, lovin muzies
    #2, waging psychological warfare against americans
    #3, being stupid.

    citing statistiscs of royal instituion, that high british english speaking outfit love muzzies exclusively.
    charges #2, #3 are forgivable becauses americans are forgiving. #1 mandatory amputation.

    This whitey supertard is a lib and probably anti luke 22:36. funny how scientific supremacy doesn’t mean a belief in the kinetic power of smokeless powder.

  3. tnx supertards on Mon, 20th Apr 2020 8:16 pm 

    why (((supremetard)))’s dk is not good?
    why supremacist muzzie andy chaudary taste so good?
    i wanna try, please teach me

  4. whoa on Mon, 20th Apr 2020 8:35 pm 

    now whitey supertard president paul is saying to hold muzzie lovers accountable for scientific supremacistm and psychological warfare against the ameircna people

    agree, first order is to string up whitey supertard scientific supremacist “thunderf00t” and amputate all limbs for lovin muzzies

    for an intelligent scientific supremacist this whitey supertard is extremely stupid, motivated by hate of americans

  5. woa on Mon, 20th Apr 2020 8:55 pm 

    supertards
    i now enjoy dog mukbang too
    please enjoy dog mukbang
    it’s dog a bunch of dogs enjoying table full of food

  6. Duncan Idaho on Mon, 20th Apr 2020 9:43 pm 

    “Crudely put, the US will not remain the one single superpower if the rest of the world sees evidence day after day that the country is run by a crackpot who cannot cope with a global calamity.:

  7. DerHundistLos on Mon, 20th Apr 2020 10:34 pm 

    ASIAN MARKETS FOR ILLEGAL WILDLIFE REMAINS STRONG DESPITE COVID-19

    One of the silver linings The International Crane Foundation sees during these challenging days is the global attention now focused on wildlife markets and illegal trade as a threat to human health. The impact of illegal trade on wildlife is well-known—the demand for ivory, powdered horn and scales, and fins for soup has devastated wild populations of elephants, rhinos, pangolins, and sharks. Millions of wild birds are smuggled illegally and traded on the black market to meet the demand for the pet trade. More than one-third of all bird species have been victims of international trade, including all fifteen species of cranes.

    At the International Crane Foundation, we have worked hard to expose the impact of illegal trade on the survival of the beautiful crowned cranes of Africa. In West Africa, our studies found that nine Black Crowned Crane chicks die for every crane captured for local domestication or sale abroad. We have partnered with Dr. Olivier Nsenginama and the Rwanda Wildlife Conservation Association to confiscate illegally held cranes, rehabilitate the birds in veterinary facilities, and release them back into the wild at Akagera National Park.

    We intercepted requests from wildlife collectors in Asia seeking shipments of as many as 500 cranes from the wild. We worked through the Convention on International Trade in Endangered Species to investigate and suspend trade from many African countries. All of this has undoubtedly helped, but illegal trade still looms large.

  8. woa on Mon, 20th Apr 2020 10:48 pm 

    DerHundistLos
    supertard der
    teach me to enjoy muzie ck pls
    i wan to learn

    muzzie blew up uk boats in maldives
    back home uk loves muzies
    muzzie andy chaudary is not amputated

  9. makati1 on Mon, 20th Apr 2020 11:23 pm 

    Then there is the contest between the uneducated, arrogant casino managing thug and the senile, demented rapist for President of the dying US. Could there be any better proof tfo the US s;ide into the 3rd world?

  10. makati1 on Mon, 20th Apr 2020 11:27 pm 

    Der, what is the difference between locking an animal up in aa zoo, or the wealthy going on safari and killing? Either way , it decimates wildlife.

    “Over the past 15 years, 1.2 million animals have been killed by Americans who traveled overseas to snag their trophies, according to a thoroughly chilling investigation by NBC Bay Area. That breaks down to about 70,000 animals each year. Many of these animals are endangered, threatened or near-threatened species.”

    “http://www.nbcbayarea.com/investigations/US-Hunters-Trophy-Hunting-Endangered-Threatened-Animals-347267462.html

    Hypocrite Americans…

  11. Davy on Tue, 21st Apr 2020 12:10 am 

    So true makato. So true.

  12. makati1 on Tue, 21st Apr 2020 1:29 am 

    FYI: “100 million animals.
    More than 100 million animals are reported killed by hunters in the United States each year. That number does not include the millions of animals for which kill figures are not maintained by state wildlife agencies.”

    https://www.google.com/search?client=firefox-b-d&q=Number+of+Americand+animals+killed+during+hunting+season%3F

    “The number of animals killed in the United States has been estimated at a million per day. About 350,000 to 27 million birds are estimated to be killed on European roads each year.”

    https://www.google.com/search?client=firefox-b-d&q=number+of+animals+killed+on+the+highway+in+the+us

    Hypocritical Amerikans, always pointing at others to blame.

  13. DerHundistLos on Tue, 21st Apr 2020 2:53 am 

    The difference, makato, is zoos are actively engaged in captive breeding programs to repopulate decimated wild populations. There are numerous examples of species declared extinct in the wild and thanks to zoos the species was reintroduced into the wild.

    You are always reflexively in attack mode regarding any statement of fact regarding Asians. This warps your thinking in obvious and unhealthy ways.

  14. DerHundistLos on Tue, 21st Apr 2020 3:02 am 

    American hunters, makato, are also conservationists. For example, since 1934 waterfowl hunters through the mandatory purchase of Duck Stamps, have generated $800 million dollars for the US Fish and Wildlife Service for the purchase and preservation of 5.7 million acres of waterfowl habitat. I will also add that 98 cents of every dollar is directed into conservation programs.

    PEOPLE
    “There are some who can live without wild things and some who cannot. Like winds and sunset, wild things were taken for granted until progress began to do away with them.” -Aldo Leopold

    When the explorers first set foot in North America, the land and skies teemed with an astonishing variety of wildlife. Within a few decades, these resources had been decimated. Millions of birds and other wildlife were killed, some species to the point of extinction.

    Market shooting to supply food to restaurants, bounty hunting and unregulated sport hunting, and collecting feathers for the fashion industry all contributed to the loss. Millions of acres of wetlands were drained to feed and house the ever-increasing population, greatly reducing waterfowl breeding and nesting habitat.

    Mother Nature has taken her toll with devastating droughts and floods that affect bird migration rest areas and wintering grounds. And climate change has the potential to alter bird populations in North America; estimates are that more than 300 species will be driven to smaller spaces or forced to find new places to live, feed and breed over the next 65 years.

    As well as providing habitat for wildlife, wetlands help maintain ground water supplies, filter pollutants, store flood waters, provide nurseries for many food sources, and protect shorelines from erosion. These provide important benefits to neighboring human communities.

    By buying Federal Duck Stamps, you can make a difference by providing wildlife habitat in your own community.

    In 1934, President Franklin D. Roosevelt signed the Migratory Bird Hunting Stamp Act (or Duck Stamp Act), and an increasingly concerned nation took firm action to stop the destruction of wetlands vital to the survival of migratory waterfowl. Under the act, all waterfowl hunters 16 years of age and over must annually buy and carry a Migratory Bird Hunting and Conservation Stamp – better known today as a Federal Duck Stamp.

    Little wonder the Federal Duck Stamp Program has been called one of the most successful conservation programs ever initiated.

  15. Davy on Tue, 21st Apr 2020 4:40 am 

    “Why The Shutdown Must End”
    https://tinyurl.com/y79cr98l zero hedge

    “The shutdown of the American economy should end as soon as possible. We have reached the point where fear and panic have precluded logic and facts. The damage from our overreaction to the Covid-19 pandemic is likely to prove greater than the death toll from the disease itself. The virus is not containable, and our attempt to achieve the unachievable grows more costly every day. In a market economy, every job is essential. And every job is certainly essential to the person who depends on it for their livelihood. In the midst of a pandemic it’s sensible to ban mass gatherings of hundreds and thousands of people. But local governments are now imposing restrictions that make little sense. Parks and golf courses have been closed. The imposition of evening curfews is baffling. Every government official with totalitarian instincts now has the moral justification to impose arbitrary and senseless curtailments on freedom of movement and association. Ironically, in the midst of a supposed epidemic, hospitals all over the nation are closing down for a lack of patients. Why? Because government officials ordered them to cancel all elective medical procedures so they could be prepared to receive a crush of Covid-19 patients that never arrived. In the last four weeks, we’ve lost 22 million jobs. In our panic over the Covid-19 pandemic, we seem to have forgotten that a robust economy supports health care, education, fire and police protection, and the construction and maintenance of critical infrastructure that maintains human civilization. The toll from the artificial induction of poverty may ultimately exceed lives lost to the disease. In 2011, researchers at Columbia University found that poverty contributes to 133,000 premature deaths annually in the US. Our stop-gap solution, massive government spending, is no panacea. Prosperity comes from production, not spending, borrowing, and taxing. If we don’t reverse course in a matter of days, we’re on our way to national suicide.”

  16. JuanP on Tue, 21st Apr 2020 5:10 am 

    Why The Shutdown Must End

    The shutdown of the American economy should end as soon as possible. We have reached the point where fear and panic have precluded logic and facts. The damage from our overreaction to the Covid-19 pandemic is likely to prove greater than the death toll from the disease itself. The virus is not containable, and our attempt to achieve the unachievable grows more costly every day. In a market economy, every job is essential. And every job is certainly essential to the person who depends on it for their livelihood. In the midst of a pandemic it’s sensible to ban mass gatherings of hundreds and thousands of people. But local governments are now imposing restrictions that make little sense. Parks and golf courses have been closed. The imposition of evening curfews is baffling. Every government official with totalitarian instincts now has the moral justification to impose arbitrary and senseless curtailments on freedom of movement and association. Ironically, in the midst of a supposed epidemic, hospitals all over the nation are closing down for a lack of patients. Why? Because government officials ordered them to cancel all elective medical procedures so they could be prepared to receive a crush of Covid-19 patients that never arrived. In the last four weeks, we’ve lost 22 million jobs. In our panic over the Covid-19 pandemic, we seem to have forgotten that a robust economy supports health care, education, fire and police protection, and the construction and maintenance of critical infrastructure that maintains human civilization. The toll from the artificial induction of poverty may ultimately exceed lives lost to the disease. In 2011, researchers at Columbia University found that poverty contributes to 133,000 premature deaths annually in the US. Our stop-gap solution, massive government spending, is no panacea. Prosperity comes from production, not spending, borrowing, and taxing. If we don’t reverse course in a matter of days, we’re on our way to national suicide.

  17. Davy on Tue, 21st Apr 2020 5:12 am 

    juanPee, I have noticed you are not commenting on the moderated side. Is it too demanding for your lunatic mind? You can’t do ID theft like you just did or play the 10 sock song you do. You are a fucking loser and mentally Ill. LMFAO. Come over to the moderated side and debate like a man. #floridapussy#

  18. boney joe on Tue, 21st Apr 2020 5:28 am 

    DavyDonaldTurd (DDT):

    DDT, your thoughts reflect and project perfectly like a mirror; the subconscious perceptions that are held about the Self. What you fail to comprehend is your incessant assaults and postings are a perfect reflection of your present state of mind and how you feel about yourself on the inside. Your resentment, anger and desire for revenge reveal anger and contempt of yourself, rooted in jealously, fear, and a sense of failure with who you are, questioning your ability to aptly compete with others.

    DDT, use this knowledge to become more self-aware and introspective. By doing so, you can diffuse inner conflict and confusion and become a pacifist of the mind rather than a bellicose, xenophobic, and hateful Trumptard of the mind.

    DavyDonaldTurd (DDT), clean-up your act, now, before it’s too late. The clock is ticking, and the hour is late.

  19. DT on Tue, 21st Apr 2020 5:30 am 

    Hi boney joe,

    I agree with everything contained in your DDT analysis.

  20. boney joe on Tue, 21st Apr 2020 5:35 am 

    “Why the Shutdown Must End”

    So Davy is now the resident epidemiologist courtesy of the Trumptarded administration.

    Another scholarly article posted by our resident insane crank, Davy aka REAL Green

    It’s nice to know your friends at Zero IQ are more knowkedegable than the Centers for Disease Control and National Institutes of Health.

    What a fucking huckster.

  21. REAL Green on Tue, 21st Apr 2020 5:37 am 

    “I agree with everything contained in your DDT analysis.”

    Me to.

    We need to see the docter Davy. REAL Bad like.

  22. Davy on Tue, 21st Apr 2020 5:40 am 

    Pink Poodle is not me. I am not insane. Honest.

    dumbass fuckwacks

  23. boney joe on Tue, 21st Apr 2020 5:52 am 

    “Why the Shutdown Must End”

    So juanPee is now the resident epidemiologist courtesy of the Trumptarded administration.

    Another scholarly article posted by our resident insane crank, juanPee aka #floridamoron#

    It’s nice to know your friends at Zero IQ are more knowkedegable than the Centers for Disease Control and National Institutes of Health.

    What a fucking huckster.

  24. DT on Tue, 21st Apr 2020 5:53 am 

    “I agree with everything contained in your DDT analysis.”

    Me to.

    We need to see the docter juanPee. REAL Bad like.

  25. JuanP on Tue, 21st Apr 2020 5:53 am 

    Pink Poodle is me. I am insane. Honest.

    dumbass fuckwacks

  26. boney joe on Tue, 21st Apr 2020 5:55 am 

    #floridamoron#

    FM, your thoughts reflect and project perfectly like a mirror; the subconscious perceptions that are held about the Self. What you fail to comprehend is your incessant assaults and postings are a perfect reflection of your present state of mind and how you feel about yourself on the inside. Your resentment, anger and desire for revenge reveal anger and contempt of yourself, rooted in jealously, fear, and a sense of failure with who you are, questioning your ability to aptly compete with others.

    FM, use this knowledge to become more self-aware and introspective. By doing so, you can diffuse inner conflict and confusion and become a pacifist of the mind rather than a bellicose, xenophobic, and hateful Trumptard of the mind.

    juanPee #floridamoron#, clean-up your act, now, before it’s too late. The clock is ticking, and the hour is late.

  27. Davy on Tue, 21st Apr 2020 6:50 am 

    I am not commenting on the moderated side. It is too demanding for my lunatic mind I can’t do ID theft like I do all the time or play the 10 sock song I also do. I am a fucking loser and mentally Ill. LMFAO. Come over to the unmoderated side and debate like a gimp. #ZHtinyURL#

  28. whoa on Tue, 21st Apr 2020 8:17 am 

    that’s ok supertard,
    when u love muzzies you do everything to maintain your muzzie loving socks

  29. JuanP on Tue, 21st Apr 2020 8:47 am 

    I am not commenting on the moderated side becuase they do not allow trolls. It is too demanding for my lunatic mind I can’t do ID theft like I do all the time or play the 10 sock song I also do. I am a fucking loser and mentally Ill. LMFAO. Come over to the unmoderated side and debate like a gimp. #ZHtinyURL#

  30. boney joe on Tue, 21st Apr 2020 8:47 am 

    LOL. that’s ok supertard,
    when u love muzzies you do everything to maintain your muzzie loving socks

  31. DT on Tue, 21st Apr 2020 8:48 am 

    fuck you juanPee

  32. Davy on Tue, 21st Apr 2020 9:50 am 

    Oops. Sorry y’all. We spelt fuckwhacks rong agin.

    Twice.

  33. Duncan Idaho on Tue, 21st Apr 2020 9:51 am 

    Why are Americans So Servile to a Clown President?
    https://www.commondreams.org/views/2020/04/20/why-are-americans-so-servile-clown-president

  34. REAL Green on Tue, 21st Apr 2020 9:53 am 

    What’s fuckwhack meen Davy. No one dun Hurd the wurd before we made it up?

  35. JuanP on Tue, 21st Apr 2020 10:25 am 

    Oops. Sorry y’all. We spelt fuckwhacks rong agin.
    Twice and again

  36. DT on Tue, 21st Apr 2020 10:27 am 

    What’s fuckwhack meen JuanPeeNo one dun Hurd the wurd before we made

  37. Davy on Tue, 21st Apr 2020 11:13 am 

    “Why are Americans So Servile to a Clown President?”

    Likely cus lots of us are Real dumb Idaho…

  38. Davy on Tue, 21st Apr 2020 11:25 am 

    “America On The Brink. Shocking Images Show “Pennsylvania Militia” Rolling Up To “Reopen America” Rally”
    https://tinyurl.com/y885cf58 zero hedge

    “America could be standing on the edge of a revolution. Anti-quarantine rallies sprouted up across the country over the weekend, organized by right-wing groups that held rallies in Texas, Indiana, New Hampshire, Nevada, Maryland, Utah, Wisconsin, Washington, and Colorado. Some protesters wielded rifles, handguns, and shotguns, along with American flags, Betsy Ross flags, Trump signs and “Don’t Tread On Me” flags right up to the doorsteps of some state capital buildings. The sight is absolutely stunning, but before we continue, we must understand the right-wing groups that organized the rallies are fed up with quarantine orders enforced by state governments to mitigate the spread of COVID-19. While it is open for discussion if the strict lockdowns were worth it, several things are evident, and why many of these protesters are angry, is that the economy has crashed into depression, 22 million jobs lost, businesses bankrupted, and hunger crisis unfolding. Combined this all together, and a perfect storm of unrest could be nearing.”

    #CW2-Git-er-dun!

  39. Abraham van Helsing on Tue, 21st Apr 2020 11:57 am 

    “Why are Americans So Servile to a Clown President?“

    Very simple:

    https://youtu.be/MA9aSvHzEIU

    And the real underlying theme of 2020 will be exactly the same.

  40. JuanP on Tue, 21st Apr 2020 12:07 pm 

    “Why are Americans So Servile to a Clown President?”
    Likely cus lots of us are Real dumb and crazy like me

  41. JuanP on Tue, 21st Apr 2020 12:09 pm 

    America On The Brink. Shocking Images Show “Pennsylvania Militia” Rolling Up To “Reopen America” Ralph
    America could be standing on the edge of a revolution. Anti-quarantine rallies sprouted up across the country over the weekend, organized by right-wing groups that held rallies in Texas, Indiana, New Hampshire, Nevada, Maryland, Utah, Wisconsin, Washington, and Colorado. Some protesters wielded rifles, handguns, and shotguns, along with American flags, Betsy Ross flags, Trump signs and “Don’t Tread On Me” flags right up to the doorsteps of some state capital buildings. The sight is absolutely stunning, but before we continue, we must understand the right-wing groups that organized the rallies are fed up with quarantine orders enforced by state governments to mitigate the spread of COVID-19. While it is open for discussion if the strict lockdowns were worth it, several things are evident, and why many of these protesters are angry, is that the economy has crashed into depression, 22 million jobs lost, businesses bankrupted, and hunger crisis unfolding. Combined this all together, and a perfect storm of unrest could be nearing.
    #CW2-Git-er-dun!

    @ #floridamoron#

  42. Rick on Tue, 21st Apr 2020 12:50 pm 

    I don’t follow politics- none of my business.

  43. Rick on Tue, 21st Apr 2020 12:57 pm 

    Trump and Biden are both assholes.

  44. Davy on Tue, 21st Apr 2020 1:47 pm 

    So true Ricky. So true.

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