Free Fall, Oil Prices Go Negative
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04-24-2020, 11:01 PM
Post: #20
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RE: Free Fall, Oil Prices Go Negative
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. [/quote] A friend of mine bought futures on a tanker full of oil. He delayed too long to sell it off and the tanker docked and he had a tanker full of oil he couldn't get rid of. Not only was he stuck with the oil, he had to pay the all the fees for each day the tanker was docked. A few million dollars later he managed to sell the oil. Tom L Cui bono? |
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