[Oil futures price plummets, Bogleheads react]

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
AlphaLess
Posts: 2679
Joined: Fri Sep 29, 2017 11:38 pm
Location: Kentucky

Re: [Oil futures price plummets, Bogleheads react]

Post by AlphaLess »

DonIce wrote: Mon Apr 20, 2020 2:38 pm
AlphaLess wrote: Mon Apr 20, 2020 2:34 pm I think contract trading ends today at 5 pm.

Tomorrow is the settlement.

The *REALLY* interesting thing is if the same thing will happen to the June contract. In which case, it is a GREAT trade. June contract is in the $20.s. If it goes into negative 40s, that is a great return.
I've been watching the June contract. It plummeted as the May contract was going negative for the first time as people were no doubt a bit frazzled with whats going on, but it is now slowly going back up.

I think short selling the June contract now and hoping it does the same as the May contract is pretty risky... a big oil production cut announcement or unanticipated re-opening of some part of a big country's economy could send oil prices soaring to $30-50 very quickly.
Exactly!
"A Republic, if you can keep it". Benjamin Franklin. 1787. | Party affiliation: Vanguard. Religion: low-cost investing.
acegolfer
Posts: 2278
Joined: Tue Aug 25, 2009 9:40 am

Re: Just ordered 10'000 barrels of oil for 45k USD - anyone else?

Post by acegolfer »

DonIce wrote: Mon Apr 20, 2020 1:05 pm
Will do good wrote: Mon Apr 20, 2020 1:02 pm At these prices, wouldn't airline, trucking, shipping industries be buying futures to lock in cheap price?
Not unless they want to pay the storage fees until they need it (currently $22/barrel for the next 1 month period). Oil futures contacts for delivery tomorrow are trading at ~$0, but oil contracts for delivery for 1 month from now are trading at $22, and two months from now at $28.
Wait. May futures are for delivery tomorrow? Isn't it deliverable in May?
https://www.cmegroup.com/trading/energy ... tions.html
AlphaLess
Posts: 2679
Joined: Fri Sep 29, 2017 11:38 pm
Location: Kentucky

Re: [Oil futures price plummets, Bogleheads react]

Post by AlphaLess »

DonIce wrote: Mon Apr 20, 2020 2:38 pm
AlphaLess wrote: Mon Apr 20, 2020 2:34 pm I think contract trading ends today at 5 pm.

Tomorrow is the settlement.

The *REALLY* interesting thing is if the same thing will happen to the June contract. In which case, it is a GREAT trade. June contract is in the $20.s. If it goes into negative 40s, that is a great return.
I've been watching the June contract. It plummeted as the May contract was going negative for the first time as people were no doubt a bit frazzled with whats going on, but it is now slowly going back up.

I think short selling the June contract now and hoping it does the same as the May contract is pretty risky... a big oil production cut announcement or unanticipated re-opening of some part of a big country's economy could send oil prices soaring to $30-50 very quickly.
Front is definitely dragging the rest of the curve down.

https://finance.yahoo.com/quote/CL%3DF/futures?p=CL%3DF
"A Republic, if you can keep it". Benjamin Franklin. 1787. | Party affiliation: Vanguard. Religion: low-cost investing.
DonIce
Posts: 1125
Joined: Thu Feb 21, 2019 6:44 pm

Re: Just ordered 10'000 barrels of oil for 45k USD - anyone else?

Post by DonIce »

acegolfer wrote: Mon Apr 20, 2020 2:40 pm
DonIce wrote: Mon Apr 20, 2020 1:05 pm
Will do good wrote: Mon Apr 20, 2020 1:02 pm At these prices, wouldn't airline, trucking, shipping industries be buying futures to lock in cheap price?
Not unless they want to pay the storage fees until they need it (currently $22/barrel for the next 1 month period). Oil futures contacts for delivery tomorrow are trading at ~$0, but oil contracts for delivery for 1 month from now are trading at $22, and two months from now at $28.
Wait. May futures are for delivery tomorrow? Isn't it deliverable in May?
https://www.cmegroup.com/trading/energy ... tions.html
Sorry, I was using sloppy language. Trading ends tomorrow and settlement begins. The actual physical delivery (for those that take physical delivery) would be in May.
acegolfer
Posts: 2278
Joined: Tue Aug 25, 2009 9:40 am

Re: [Oil futures price plummets, Bogleheads react]

Post by acegolfer »

RayKeynes wrote: Mon Apr 20, 2020 1:46 pm What would actually happen if I buy 1 contract of oil? I will get 40$ and then what?

From where will the oil be delivered? Do they deliver to private people?
In real life, retail investors settle in cash at expiration. No physical delivery for you. So if you purchase at -$40 and contract expires at -$40, then you get $0 profit.
User avatar
Will do good
Posts: 1023
Joined: Fri Feb 24, 2012 8:23 pm

Re: [Oil futures price plummets, Bogleheads react]

Post by Will do good »

AlphaLess wrote: Mon Apr 20, 2020 2:39 pm
Will do good wrote: Mon Apr 20, 2020 2:37 pm Hope our government is smart enough to buy these future as much as possible, and stored them at the Strategic Petroleum Reserve (SPR) in underground salt caverns.
You can't store the futures in the SPT.

You need to:
- think and plan ahead,
- have transport and other infrastructure,
- buy the futures,
- wait until settlement,
- get delivery,
- transport,
- fill up the SPR.
I'm sorry I wasn't clear, I mean by the future and take delivery when available and fill up SPR.
pahkcah
Posts: 104
Joined: Tue Dec 15, 2015 10:50 pm

Re: [Oil futures price plummets, Bogleheads react]

Post by pahkcah »

Will do good wrote: Mon Apr 20, 2020 2:37 pm Hope our government is smart enough to buy these future as much as possible, and stored them at the Strategic Petroleum Reserve (SPR) in underground salt caverns.
+1
I had exactly the same thought. Should be filling SPR to the brim while price is right.
rob65
Posts: 379
Joined: Mon May 09, 2016 1:30 pm

Re: Just ordered 10'000 barrels of oil for free - anyone else?

Post by rob65 »

jpelder wrote: Mon Apr 20, 2020 1:21 pm
Will do good wrote: Mon Apr 20, 2020 1:15 pm Wonder if I can store these oil in my swimming pool? maybe use the community pool as well. :twisted:
Can you just imagine the Nextdoor posts?
That will be the HOA thread to end all HOA threads. :happy
User avatar
unclescrooge
Posts: 5329
Joined: Thu Jun 07, 2012 7:00 pm

Re: [Oil futures prices plummets, Bogleheads react]

Post by unclescrooge »

DonIce wrote: Mon Apr 20, 2020 1:40 pm
AlphaLess wrote: Mon Apr 20, 2020 1:38 pm
RayKeynes wrote: Mon Apr 20, 2020 1:36 pm Cant you just buy 1'000'000 contracts and get 40 million USD and let 1 oil tanker sink in the ocean? 8-)
Math for storage does not add up. If you sink a tanker into the ocean, you are SHORT a tanker.
You need extra tanker.
If there were no laws, you would literally be getting paid $40/barrel to pour oil into the ocean right now.
That's why you are getting paid. You cannot pour a million barrels into the ocean.
AlphaLess
Posts: 2679
Joined: Fri Sep 29, 2017 11:38 pm
Location: Kentucky

Re: [Oil futures price plummets, Bogleheads react]

Post by AlphaLess »

btenny wrote: Mon Apr 20, 2020 2:00 pm Maybe this cheap oil will make airplane gas and cruise ship oil cheap enough that the companies can still make money with half passenger loads.. Remember fuel is a big part of their costs.

So tickets to go places this fall may be really cheap..... If you are willing to take the risk....
Ah, with 'half passenger loads'. Wishful thinking. Airline travel is down something like 95%.

That is 5% of the pre-crisis level.

To go back to 50%, that is a 900% increase from current levels.

Not an impossible feat, but very very difficult.
"A Republic, if you can keep it". Benjamin Franklin. 1787. | Party affiliation: Vanguard. Religion: low-cost investing.
AlphaLess
Posts: 2679
Joined: Fri Sep 29, 2017 11:38 pm
Location: Kentucky

Re: Just ordered 10'000 barrels of oil for free - anyone else?

Post by AlphaLess »

rob65 wrote: Mon Apr 20, 2020 3:10 pm
jpelder wrote: Mon Apr 20, 2020 1:21 pm
Will do good wrote: Mon Apr 20, 2020 1:15 pm Wonder if I can store these oil in my swimming pool? maybe use the community pool as well. :twisted:
Can you just imagine the Nextdoor posts?
That will be the HOA thread to end all HOA threads. :happy
Why think small, and store in the pool?

How about emptying the Great Lakes and storing crude there?
"A Republic, if you can keep it". Benjamin Franklin. 1787. | Party affiliation: Vanguard. Religion: low-cost investing.
alfaspider
Posts: 3030
Joined: Wed Sep 09, 2015 4:44 pm

Re: [Oil futures prices plummets, Bogleheads react]

Post by alfaspider »

unclescrooge wrote: Mon Apr 20, 2020 3:18 pm
DonIce wrote: Mon Apr 20, 2020 1:40 pm
AlphaLess wrote: Mon Apr 20, 2020 1:38 pm
RayKeynes wrote: Mon Apr 20, 2020 1:36 pm Cant you just buy 1'000'000 contracts and get 40 million USD and let 1 oil tanker sink in the ocean? 8-)
Math for storage does not add up. If you sink a tanker into the ocean, you are SHORT a tanker.
You need extra tanker.
If there were no laws, you would literally be getting paid $40/barrel to pour oil into the ocean right now.
That's why you are getting paid. You cannot pour a million barrels into the ocean.
Yep. The liabilities incurred from pouring oil into the ocean are a LOT more than $40/bbl.
Patzer
Posts: 302
Joined: Wed Jun 10, 2015 10:56 am

Re: [Oil futures price plummets, Bogleheads react]

Post by Patzer »

GTBuzz wrote: Mon Apr 20, 2020 2:11 pm
AlphaLess wrote: Mon Apr 20, 2020 2:02 pm
GTBuzz wrote: Mon Apr 20, 2020 1:59 pm While the numbers are historic and interesting, I would caution against reading anything into them. No one is paying anyone $40,000 to take 1,000 barrels of oil. These trades remind me of the May 2010 "Flash Crash", when many total market ETF's "traded" for pennies per share. Those trades were later reversed, as they were done by computers who did not know how to react to such a situation.

I suspect these numbers are driven by computers reacting unexpectedly to zero legitimate demand for oil delivered to Cushing, OK next month, or perhaps a rogue trader just having fun pushing the numbers way outside of anything realistic, knowing that there is no legitimate demand for this oil contract and there will be no consequences of not delivering.
Don't be so naive. No one is reversing these trades.
Perhaps they won't be "reversed", but the actual delivery of crude will not occur at these "prices."
What inside info do you have to say that the delivery of oil won't occur at the contracted price to deliver that oil?
aristotelian
Posts: 8049
Joined: Wed Jan 11, 2017 8:05 pm

Re: Just ordered 10'000 barrels of oil for free - anyone else?

Post by aristotelian »

AlphaLess wrote: Mon Apr 20, 2020 3:25 pm
rob65 wrote: Mon Apr 20, 2020 3:10 pm
jpelder wrote: Mon Apr 20, 2020 1:21 pm
Will do good wrote: Mon Apr 20, 2020 1:15 pm Wonder if I can store these oil in my swimming pool? maybe use the community pool as well. :twisted:
Can you just imagine the Nextdoor posts?
That will be the HOA thread to end all HOA threads. :happy
Why think small, and store in the pool?

How about emptying the Great Lakes and storing crude there?
If they could do it they almost certainly would have by now.
1130Super
Posts: 523
Joined: Thu Nov 07, 2019 8:59 am
Location: Minnesota

Re: [Oil futures price plummets, Bogleheads react]

Post by 1130Super »

GTBuzz wrote: Mon Apr 20, 2020 2:11 pm
AlphaLess wrote: Mon Apr 20, 2020 2:02 pm
GTBuzz wrote: Mon Apr 20, 2020 1:59 pm While the numbers are historic and interesting, I would caution against reading anything into them. No one is paying anyone $40,000 to take 1,000 barrels of oil. These trades remind me of the May 2010 "Flash Crash", when many total market ETF's "traded" for pennies per share. Those trades were later reversed, as they were done by computers who did not know how to react to such a situation.

I suspect these numbers are driven by computers reacting unexpectedly to zero legitimate demand for oil delivered to Cushing, OK next month, or perhaps a rogue trader just having fun pushing the numbers way outside of anything realistic, knowing that there is no legitimate demand for this oil contract and there will be no consequences of not delivering.
Don't be so naive. No one is reversing these trades.
Perhaps they won't be "reversed", but the actual delivery of crude will not occur at these "prices."
Oil futures contracts are exactly what they are CONTRACTS. If you have an oil futures contract at -$40 the person on the other side of the trade is legally obligated to give you 1000 barrels of oil and pay you $40,000, if they fail to do so there could be a lawsuit I would imagine.
User avatar
Nicolas
Posts: 2188
Joined: Wed Aug 22, 2012 7:41 am

Re: Just ordered 10'000 barrels of oil for free - anyone else?

Post by Nicolas »

aristotelian wrote: Mon Apr 20, 2020 4:22 pm
AlphaLess wrote: Mon Apr 20, 2020 3:25 pm
rob65 wrote: Mon Apr 20, 2020 3:10 pm
jpelder wrote: Mon Apr 20, 2020 1:21 pm
Will do good wrote: Mon Apr 20, 2020 1:15 pm Wonder if I can store these oil in my swimming pool? maybe use the community pool as well. :twisted:
Can you just imagine the Nextdoor posts?
That will be the HOA thread to end all HOA threads. :happy
Why think small, and store in the pool?

How about emptying the Great Lakes and storing crude there?
If they could do it they almost certainly would have by now.
Wasn’t it Paul Bunyan who dug out the Great Lakes originally? Where is he now when we need him?
User avatar
physixfan
Posts: 209
Joined: Wed Apr 03, 2019 4:09 pm

Re: [Oil futures price plummets, Bogleheads react]

Post by physixfan »

Can we say "this time it's different" today? Who would have thought that WTI crude oil price can be negative before this year 😂 Now we can't even use a log plot any more to show the crude oil price 😂
AlphaLess
Posts: 2679
Joined: Fri Sep 29, 2017 11:38 pm
Location: Kentucky

Re: Just ordered 10'000 barrels of oil for free - anyone else?

Post by AlphaLess »

aristotelian wrote: Mon Apr 20, 2020 4:22 pm
AlphaLess wrote: Mon Apr 20, 2020 3:25 pm
rob65 wrote: Mon Apr 20, 2020 3:10 pm
jpelder wrote: Mon Apr 20, 2020 1:21 pm
Will do good wrote: Mon Apr 20, 2020 1:15 pm Wonder if I can store these oil in my swimming pool? maybe use the community pool as well. :twisted:
Can you just imagine the Nextdoor posts?
That will be the HOA thread to end all HOA threads. :happy
Why think small, and store in the pool?

How about emptying the Great Lakes and storing crude there?
If they could do it they almost certainly would have by now.
Total volume of the Great Lakes: 22,700 km^3.
Oil is measured in barrels. 1 barrel = 159 liters (42 gallons).
One day's oil production on earth, roughly 100m barrels = 15.9 billion liters.
1 m^3 = 1000 liters.
1 km^3 = 1000 * 1000 * 1000 m^3 = one Trillion liters, or 62.9 days worth of oil production

So, let's see how many barrels of oil fit into the Great Lakes.

22,700 km^3 = 22,700 * Trillion liters = 22,700 * 62.9 = 1,427,000 days worth of oil supply.
That is 4000 years worth of oil.

I think civilization may end in that timeframe.
"A Republic, if you can keep it". Benjamin Franklin. 1787. | Party affiliation: Vanguard. Religion: low-cost investing.
Allan
Posts: 875
Joined: Wed Feb 21, 2007 9:15 pm
Location: Houston

Re: [Oil futures price plummets, Bogleheads react]

Post by Allan »

Houston, we have a problem. Literally (the City). I'm also worried about the banks.
acegolfer
Posts: 2278
Joined: Tue Aug 25, 2009 9:40 am

Re: [Oil futures price plummets, Bogleheads react]

Post by acegolfer »

1130Super wrote: Mon Apr 20, 2020 4:45 pm
Oil futures contracts are exactly what they are CONTRACTS. If you have an oil futures contract at -$40 the person on the other side of the trade is legally obligated to give you 1000 barrels of oil and pay you $40,000, if they fail to do so there could be a lawsuit I would imagine.
Lawsuit? Possible, for a forward contract.

But for futures, no. The futures buyer didn't trade directly with the futures seller.
Last edited by acegolfer on Mon Apr 20, 2020 5:57 pm, edited 1 time in total.
GTBuzz
Posts: 90
Joined: Wed Apr 01, 2015 2:06 pm

Re: [Oil futures price plummets, Bogleheads react]

Post by GTBuzz »

1130Super wrote: Mon Apr 20, 2020 4:45 pm Oil futures contracts are exactly what they are CONTRACTS. If you have an oil futures contract at -$40 the person on the other side of the trade is legally obligated to give you 1000 barrels of oil and pay you $40,000, if they fail to do so there could be a lawsuit I would imagine.
But the futures contracts are not resolved with delivery of oil. They're resolved on paper by comparing the contracted price with the actual spot price of oil at the contracted time. 99% of the time, that satisfies both sides of the contract, since neither party was actually wanting to deliver or receive the oil.

Now that we're in a situation where there is no capacity to support the trade of crude oil in Cushing, OK in May, this particular futures contract is broken. The -$40 is not a real price, and no one is going to be handing out $7,500 for the privilege of filling up some random guy's tanker truck, just because two weeks earlier a futures contract expired under extremely thin trading and nonexistent underlying demand.
acegolfer
Posts: 2278
Joined: Tue Aug 25, 2009 9:40 am

Re: [Oil futures price plummets, Bogleheads react]

Post by acegolfer »

GTBuzz wrote: Mon Apr 20, 2020 5:56 pm
1130Super wrote: Mon Apr 20, 2020 4:45 pm Oil futures contracts are exactly what they are CONTRACTS. If you have an oil futures contract at -$40 the person on the other side of the trade is legally obligated to give you 1000 barrels of oil and pay you $40,000, if they fail to do so there could be a lawsuit I would imagine.
But the futures contracts are not resolved with delivery of oil. They're resolved on paper by comparing the contracted price with the actual spot price of oil at the contracted time. 99% of the time, that satisfies both sides of the contract, since neither party was actually wanting to deliver or receive the oil.

Now that we're in a situation where there is no capacity to support the trade of crude oil in Cushing, OK in May, this particular futures contract is broken. The -$40 is not a real price, and no one is going to be handing out $7,500 for the privilege of filling up some random guy's tanker truck, just because two weeks earlier a futures contract expired under extremely thin trading and nonexistent underlying demand.
Not all /CL futures are settled in cash. Some are physically delivered. See the "Delivery" part from https://www.cmegroup.com/trading/energy ... tions.html
RetiredAL
Posts: 970
Joined: Tue Jun 06, 2017 12:09 am
Location: SF Bay Area

Re: [Oil futures price plummets, Bogleheads react]

Post by RetiredAL »

The perfect long-term storage places exists today. It's easy! Just leave it in the ground. Turn the pumps off. It's not a new idea either. Many wells are shutdown in times of low prices, and re-started when the price goes up.

IMO, the problem with today's pricing mostly likely has to do with what's already in transit and the destination storage is getting tight.
RiotAct
Posts: 37
Joined: Tue Mar 31, 2020 8:21 pm

Re: [Oil futures price plummets, Bogleheads react]

Post by RiotAct »

physixfan wrote: Mon Apr 20, 2020 4:58 pm Can we say "this time it's different" today? Who would have thought that WTI crude oil price can be negative before this year 😂 Now we can't even use a log plot any more to show the crude oil price 😂
Stay the course.
JonnyB
Posts: 688
Joined: Sun Jan 19, 2020 5:28 pm

Re: [Oil futures price plummets, Bogleheads react]

Post by JonnyB »

RetiredAL wrote: Mon Apr 20, 2020 6:24 pm The perfect long-term storage places exists today. It's easy! Just leave it in the ground. Turn the pumps off. It's not a new idea either. Many wells are shutdown in times of low prices, and re-started when the price goes up.
The problem is that most drilling companies are heavily leveraged by capital costs. They have large debts to service so they can't stop pumping because they desperately need cash. This only worsens the pricing situation, which leads to a death spiral.
anoop
Posts: 1745
Joined: Tue Mar 04, 2014 1:33 am

Re: [Oil futures price plummets, Bogleheads react]

Post by anoop »

Not much different from farmers throwing away vegetables and milk because restaurants are not buying.
https://www.northcoastjournal.com/NewsB ... mand-soars

Or paying the ECB to hold your money.

Or paying LVMH to hold your money.

Plenty of weirdness going on.

I wonder what is the inventory situation at retailers that have been shut for a few weeks now. I'm sure their whole supply chain is jamming up.
User avatar
whodidntante
Posts: 9087
Joined: Thu Jan 21, 2016 11:11 pm
Location: outside the echo chamber

Re: Just ordered 10'000 barrels of oil for free - anyone else?

Post by whodidntante »

AlphaLess wrote: Mon Apr 20, 2020 5:04 pm I think civilization may end in that timeframe.
You mean it gets worse than record unemployment and no poker games? :shock:
User avatar
whodidntante
Posts: 9087
Joined: Thu Jan 21, 2016 11:11 pm
Location: outside the echo chamber

Re: [Oil futures price plummets, Bogleheads react]

Post by whodidntante »

DonIce wrote: Mon Apr 20, 2020 2:38 pm I think short selling the June contract now and hoping it does the same as the May contract is pretty risky... a big oil production cut announcement or unanticipated re-opening of some part of a big country's economy could send oil prices soaring to $30-50 very quickly.
What's that? A sure thing, you say? :happy
123
Posts: 6384
Joined: Fri Oct 12, 2012 3:55 pm

Re: [Oil futures price plummets, Bogleheads react]

Post by 123 »

We know that prices at retail gas stations follow oil prices, sometimes they move quickly. If oil prices go strongly negative perhaps gas prices will go negative as well. We could get in a position where we get a credit for "buying" gas instead of a charge.
The closest helping hand is at the end of your own arm.
User avatar
steve roy
Posts: 1778
Joined: Thu May 13, 2010 5:16 pm

Re: [Oil futures price plummets, Bogleheads react]

Post by steve roy »

Hopefully this new market activity means that they will soon be paying us to fill up at the pump.
User avatar
Topic Author
Stef
Posts: 1138
Joined: Thu Oct 10, 2019 10:13 am

Re: [Oil futures price plummets, Bogleheads react]

Post by Stef »

UCO +2200%
User avatar
Dale_G
Posts: 3382
Joined: Tue Feb 20, 2007 5:43 pm
Location: Central Florida - on the grown up side of 83

Re: [Oil futures price plummets, Bogleheads react]

Post by Dale_G »

Don't forget the 18.4 cent per gallon federal excise tax. And then there are state taxes. California takes the lead at 61.2 cents/gal and Alaska is at the tail end at 14.66 cents/gal.

Dale
Volatility is my friend
DoubleClick
Posts: 517
Joined: Mon Oct 18, 2010 1:12 am

Re: [Oil futures price plummets, Bogleheads react]

Post by DoubleClick »

123 wrote: Tue Apr 21, 2020 12:30 am We know that prices at retail gas stations follow oil prices, sometimes they move quickly. If oil prices go strongly negative perhaps gas prices will go negative as well. We could get in a position where we get a credit for "buying" gas instead of a charge.
A credit would actually make sense: "storing" all that excess oil in 250million car gas tanks would mean 2.5 billion gallons of storage, if each car/SUV/truck had 10 gallons of fillable space on average. If stations could convince people to show up for a credit for filling their tanks.
fatFIRE
Posts: 346
Joined: Sat Feb 15, 2020 10:44 pm

Re: [Oil futures price plummets, Bogleheads react]

Post by fatFIRE »

Stef wrote: Tue Apr 21, 2020 1:16 amUCO +2200%
Holy... how did that happen?
User avatar
Topic Author
Stef
Posts: 1138
Joined: Thu Oct 10, 2019 10:13 am

Re: [Oil futures price plummets, Bogleheads react]

Post by Stef »

fatFIRE wrote: Tue Apr 21, 2020 1:33 am
Stef wrote: Tue Apr 21, 2020 1:16 amUCO +2200%
Holy... how did that happen?
I think it's not really priced correctly. It will be rolled to the June contract.
fatFIRE
Posts: 346
Joined: Sat Feb 15, 2020 10:44 pm

Re: [Oil futures price plummets, Bogleheads react]

Post by fatFIRE »

Stef wrote: Tue Apr 21, 2020 1:34 am
fatFIRE wrote: Tue Apr 21, 2020 1:33 am
Stef wrote: Tue Apr 21, 2020 1:16 amUCO +2200%
Holy... how did that happen?
I think it's not really priced correctly. It will be rolled to the June contract.
As in people actually sold it for that amount and walked off with 20X more money, or there's a glitch in the website showing the wrong price?

I'm seriously curious as to how it went up 20X.
User avatar
McGilicutty
Posts: 345
Joined: Tue Dec 13, 2016 5:24 pm

Re: [Oil futures price plummets, Bogleheads react]

Post by McGilicutty »

WTI May contract trading at -$4.50 this morning. I think today is the last day of trading for that contract. It looks like yesterday was just massive panic selling.
User avatar
Rainier
Posts: 1531
Joined: Thu Jun 14, 2012 5:59 am

Re: [Oil futures price plummets, Bogleheads react]

Post by Rainier »

USO halted pending news....it is done.
User avatar
Rainier
Posts: 1531
Joined: Thu Jun 14, 2012 5:59 am

Re: [Oil futures price plummets, Bogleheads react]

Post by Rainier »

Stef wrote: Tue Apr 21, 2020 1:16 amUCO +2200%
Not even close. They did a reverse split. Will open down 20%+ after taking into account a reverse split.

USO will not issue any more creation units, which means they are likely liquidating as they try to unwind their June contracts before those go negative.

Edit: when you own 33% of the market (June contracts) it is not easy to unwind.
User avatar
firebirdparts
Posts: 1782
Joined: Thu Jun 13, 2019 4:21 pm

Re: [Oil futures price plummets, Bogleheads react]

Post by firebirdparts »

Looking at UCO is a good way to ponder just how wrong people with money can be.
A fool and your money are soon partners
User avatar
whodidntante
Posts: 9087
Joined: Thu Jan 21, 2016 11:11 pm
Location: outside the echo chamber

Re: [Oil futures price plummets, Bogleheads react]

Post by whodidntante »

USO - UNITED STATES OIL FUND LP ETF has suspended creations. I'll let y'all fight for the remaining shares. :happy
User avatar
McGilicutty
Posts: 345
Joined: Tue Dec 13, 2016 5:24 pm

Re: [Oil futures price plummets, Bogleheads react]

Post by McGilicutty »

WTI May contract trading positive again. Now at +$1.25 a barrel.
User avatar
Rainier
Posts: 1531
Joined: Thu Jun 14, 2012 5:59 am

Re: [Oil futures price plummets, Bogleheads react]

Post by Rainier »

whodidntante wrote: Tue Apr 21, 2020 8:53 am USO - UNITED STATES OIL FUND LP ETF has suspended creations. I'll let y'all fight for the remaining shares. :happy
Dumb money continues to flow in driving up the price of USO as it disconnects from the value of its holdings. No way to create new units to equalize the imbalance.. Financial weapons of mass destruction in action.
User avatar
whodidntante
Posts: 9087
Joined: Thu Jan 21, 2016 11:11 pm
Location: outside the echo chamber

Re: [Oil futures price plummets, Bogleheads react]

Post by whodidntante »

Rainier wrote: Tue Apr 21, 2020 8:56 am
whodidntante wrote: Tue Apr 21, 2020 8:53 am USO - UNITED STATES OIL FUND LP ETF has suspended creations. I'll let y'all fight for the remaining shares. :happy
Dumb money continues to flow in driving up the price of USO as it disconnects from the value of its holdings. No way to create new units to equalize the imbalance.. Financial weapons of mass destruction in action.
What's that you say? Short USO? :twisted:
User avatar
Rainier
Posts: 1531
Joined: Thu Jun 14, 2012 5:59 am

Re: [Oil futures price plummets, Bogleheads react]

Post by Rainier »

whodidntante wrote: Tue Apr 21, 2020 10:13 am
Rainier wrote: Tue Apr 21, 2020 8:56 am
whodidntante wrote: Tue Apr 21, 2020 8:53 am USO - UNITED STATES OIL FUND LP ETF has suspended creations. I'll let y'all fight for the remaining shares. :happy
Dumb money continues to flow in driving up the price of USO as it disconnects from the value of its holdings. No way to create new units to equalize the imbalance.. Financial weapons of mass destruction in action.
What's that you say? Short USO? :twisted:
The puts are pretty expensive right now and not sure how they would pay out if this goes into liquidation.

By halting new creation units it is effectively a closed end fund now.
User avatar
whodidntante
Posts: 9087
Joined: Thu Jan 21, 2016 11:11 pm
Location: outside the echo chamber

Re: [Oil futures price plummets, Bogleheads react]

Post by whodidntante »

Rainier wrote: Tue Apr 21, 2020 10:24 am
whodidntante wrote: Tue Apr 21, 2020 10:13 am
Rainier wrote: Tue Apr 21, 2020 8:56 am
whodidntante wrote: Tue Apr 21, 2020 8:53 am USO - UNITED STATES OIL FUND LP ETF has suspended creations. I'll let y'all fight for the remaining shares. :happy
Dumb money continues to flow in driving up the price of USO as it disconnects from the value of its holdings. No way to create new units to equalize the imbalance.. Financial weapons of mass destruction in action.
What's that you say? Short USO? :twisted:
The puts are pretty expensive right now and not sure how they would pay out if this goes into liquidation.

By halting new creation units it is effectively a closed end fund now.
E*Trade considers USO hard to borrow and is charging 10% for a direct short.
AlphaLess
Posts: 2679
Joined: Fri Sep 29, 2017 11:38 pm
Location: Kentucky

Re: Just ordered 10'000 barrels of oil for free - anyone else?

Post by AlphaLess »

whodidntante wrote: Tue Apr 21, 2020 12:20 am
AlphaLess wrote: Mon Apr 20, 2020 5:04 pm I think civilization may end in that timeframe.
You mean it gets worse than record unemployment and no poker games? :shock:
Well, if one half of the population manages to eliminate the other half via wars, famine, etc.
"A Republic, if you can keep it". Benjamin Franklin. 1787. | Party affiliation: Vanguard. Religion: low-cost investing.
DonIce
Posts: 1125
Joined: Thu Feb 21, 2019 6:44 pm

Re: [Oil futures price plummets, Bogleheads react]

Post by DonIce »

whodidntante wrote: Tue Apr 21, 2020 10:31 am E*Trade considers USO hard to borrow and is charging 10% for a direct short.
Is that 10% / day or 10% / year? If it's anything other than a day it's probably a bargain as it could go to zero within weeks.
User avatar
whodidntante
Posts: 9087
Joined: Thu Jan 21, 2016 11:11 pm
Location: outside the echo chamber

Re: [Oil futures price plummets, Bogleheads react]

Post by whodidntante »

DonIce wrote: Tue Apr 21, 2020 11:59 am
whodidntante wrote: Tue Apr 21, 2020 10:31 am E*Trade considers USO hard to borrow and is charging 10% for a direct short.
Is that 10% / day or 10% / year? If it's anything other than a day it's probably a bargain as it could go to zero within weeks.
10% interest rate. Although it may have changed because that was several hours ago. Let us know how your trade works out. :happy
JonnyB
Posts: 688
Joined: Sun Jan 19, 2020 5:28 pm

Re: [Oil futures price plummets, Bogleheads react]

Post by JonnyB »

So what happens if someone shorted the oil market and simultaneously bought up the last 5% or so of available storage capacity in Cushing, Oklahoma.
Post Reply