So…the barrel now costs more than the 55 gallons of oil it holds.
$2.50 oil. What a time to be alive.
you gotta respect the sauds timing. reminds me of rockefeller back in the day.
We no longer need oil to produce energy, so its price will naturally crash. (Well at least the general public has not been aware of free energy – we’ve had it for many years, just was not allowed to be used in the economy). This is eliminating the petro dollar and facilitating the restructuring of global debt. The world shifts dramatically in an instant, not in a slow linear fashion. Learn.
Russia’s timing.
Oil futures for May down to 19 cents now, but June oil futures at over $22. Nobody wants to (or can) take delivery of oil futures before the May contract expires tomorrow.
As I wrote that the price fell to 1 cent…
everything goes back to russia…
It’s now minus $1.87…so if you buy 1 crude oul future you get 1,000 barrels of oil and $1.87 in cash from the seller for each barrel!
Doesn’t the US have the SOR? Or did Trump fill that up at $20 a barrel?
edit: was trying to quote the post that said no one can take delivery of the physical
I don’t understand this–Morningstar still reports “Light Crude” at $21. Yet, I hear all these reports of “negative oil”. Why the disconnect?
It’s the May NYMEX crude oil future that went negative today down to -$40.32. It expires tomorrow and the June NYMEX contract takes over (which is trading at $21 right now). Mass exodus from May oil futures before the delivery period.
A lot can happen bt now and June.
Again–somebody help me out. (L3 was seven years ago)
If oil is -$40, does that mean that you’re paying me $40 to take a barrel of oil from you?
Yes, the contract is physical delivery so the holders need capacity to actually take in the oil after expiration.
SOR and more broadly global storage is at or within 1-2 weeks of full capacity including all floating storage, rail cars, etc. Russia gambled on forcing out shale in a downturn but did not anticipate the severity of COVID-19 shutdown on oil and gas demand (driving, airlines, shipping). Ironically while Russia is one of the lowest cost producers they are not one of the leaders in storage capacity which is quickly turning oil into a localized market. The WTI you’re hearing quoted is May contract which matures tomorrow. People were panicking to close out to avoid taking delivery where no storage exists. June trading near $20 which is probably a more accurate depiction. What you’re seeing is a technical. Keep in mind OPEC++ doesn’t officially take effect until May 1. Also crude is a volatile and noxious material, storing it is not as simple as putting barrels in your yard in most cases.
Haha fascinating. So what are people doing with the oil they just bought?
Came across this link on Reddit. Mark Meldrums view on the current state of affairs. Must say, it’s nice to watch another one of his vids. I was a big supporter of his when I studying levels 2 and 3. Love him or hate him, he’s got a knack for explaining things.
Nerdy as a multiples guy you should find this particularly interesting.
Stocks and indexes fell the last minutes of the day because OIL futures roll went negative. I Don’t know if today ends as another negative day…
Yea I’ve looked at shillers data and Lowest forward P/E multiple was 5.3x.
I like his mindset. Would not sell but would not buy either. As for shorting, I’d never short. Math doesn’t make sense for it. At least for the last 200 years.
I disagree with the 155 eps estimate. I think it’ll be lower. I also think we should have a lower multiple. But I’m not going to sell either way.
During the financial crisis pe multiples were expensive like 150x in 2008x And if you shorted it. The last 10 years would have destroyed you .
Anyways having said that I’d be cool with using borrowed money to buy at 2200. I’m just looking at it from a max drawdown perspective. With A 35 percent downside I’ll take my chances. The further it goes down the deeper in margin I’ll go. I will ease it in.
But I disagree on multiples getting expensive over time. It’s a mean reversion imo. Sure in the last 20 years that’s been the case but what about the last 200 years. If we have a highly inflationary environment, I think P/E ratios are going to drop m.
Also Buying passive is kinda dumb . Like he said a lot of those companies are going to be dead. So to buy indiscriminately would be dumb.
There are 2 way to invest in this market. Buying solid balance sheets so that they don’t die before things get back to normal, and companies that can increase prices in 2021. Because Id watch out for inflation. Like a lot of it.
Fed expanded the balance sheet by 2 trillion in a month to support asset prices. It’s disgusting but that is what we have to deal with.
But over time the real winners , lower their multiple by increasing their earnings usually because they can increase their price or run a better co.
If the fed is going to print money then buy who can keep up with the printing. If you have a solid skill that people need then there is no need to worry cuz u can raise your prices.