Free Fall, Oil Prices Go Negative
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04-24-2020, 05:56 PM
Post: #19
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RE: Free Fall, Oil Prices Go Negative
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The article says they're running out of places to store the oil. How about this: JUST STOP PUMPING IT OUT OF THE GROUND? [/quote] That's not how the futures market works. Wikipedia: Futures contract The seller already agreed to sell oil at a predetermined price at a specified time in the future, so he gets paid the agreed-upon price (not today's price), he makes a profit, and he has to honor his contract to deliver. If the price had gone up the buyer would have gotten a bargain. Because the price went down the buyer ends up overpaying and takes a loss. Here is an explanation from the NYT: "What Negative Oil Prices Mean and How the Impact Could Last: The strange thing that happened in oil markets does not mean you can make money storing oil, or that gasoline will cost nothing." https://www.nytimes.com/article/negative...story.html |
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