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james22

By james22
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Spekulatius
Spekulatius

I guess it may be time for another flush: I do not think the Saudi's will play this over again like in 2015, as it cost them dearly.

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opihiman2 Newbie

opihiman2

Posted
Posted

Yeah, there's really no way to take advantage of this.  In a contango market, direct ETF exposure is a guaranteed money loser.  A lot of people don't get this and plow into funds like USO and USL without understanding how the get exposure to oil prices.  These current contract prices are getting closer to the actual spot price of oil, and unless you can take delivery of an ACTUAL barrel of oil, you're still going to lose money.  The only way to get exposure to oil prices without getting screwed by contango is going long equity in oil companies.  But, in the past two weeks, there's been a large disconnect between the two. 

 

Unless current spot of WTI goes above $30, even XOM will be financially impacted. 

WneverLOSE Newbie

WneverLOSE

Posted
Posted

Dumb investor here, Can I buy oil futures using a discount broker ? what happens if I don't sell it ? will I get a barrel with my name on it in Cushing Oklahoma I can take home ? Why wouldn't everyone do it and store the oil in their back yard and flip it for 20$ next month for a 40x return in a month ?

rb Newbie

rb

Posted
Posted

Dumb investor here, Can I buy oil futures using a discount broker ? what happens if I don't sell it ? will I get a barrel with my name on it in Cushing Oklahoma I can take home ? Why wouldn't everyone do it and store the oil in their back yard and flip it for 20$ next month for a 40x return in a month ?

Your discount broker will close your account because they don't have storage at Cushing and they will never talk to you again. Chances are good to receive hate mail from some VP at said broker.

Foreign Tuffett Newbie

Foreign Tuffett

Posted
Posted

Dumb investor here, Can I buy oil futures using a discount broker ? what happens if I don't sell it ? will I get a barrel with my name on it in Cushing Oklahoma I can take home ? Why wouldn't everyone do it and store the oil in their back yard and flip it for 20$ next month for a 40x return in a month ?

 

Yes, your broker will ship you a barrel of oil. Bury it in your backyard, and over time it will grow into a full size oil well. In 20 years you'll have a gusher!

Liberty Contributor

Liberty

Posted
Posted

Doesn't Berkshire own like a shitload of tank cars?

 

Pretty sure they don't keep them empty waiting for a day like this and that they're mostly all in use already.

SharperDingaan Mentor

SharperDingaan

Posted
Posted

This is where you discover the difference between a paper barrel, and a physical barrel.

And how poorly the futures markets are understood.

 

There is no storage, there will be no outstanding contracts, and the market will clear by cutting price.

And we will all be FINALLY forced to recognize that the paper price of a barrel, has little to do with the physical price. 

 

SD

 

 

 

Castanza Veteran

Castanza

Posted
Posted

This is where you discover the difference between a paper barrel, and a physical barrel.

And how poorly the futures markets are understood.

 

There is no storage, there will be no outstanding contracts, and the market will clear by cutting price.

And we will all be FINALLY forced to recognize that the paper price of a barrel, has little to do with the physical price. 

 

SD

 

What's this say about other commodities?

 

Dumb investor here, Can I buy oil futures using a discount broker ? what happens if I don't sell it ? will I get a barrel with my name on it in Cushing Oklahoma I can take home ? Why wouldn't everyone do it and store the oil in their back yard and flip it for 20$ next month for a 40x return in a month ?

 

If you have an old beater you could try this.

 

SharperDingaan Mentor

SharperDingaan

Posted
Posted

As at 4:09 pm EST: WTI is priced at MINUS USD 35.30.

The immediate issue is which big players have bankrupted, and what announcements are we going to hear in the next day or so;

as this will be on par with the collapse of Lehman Bros, and the other US I-Banks, at the start of the GFC.

 

The follow-up will be that if there was hesitation on a NA oil tariff before, it's now gone.

This will have done major damage to US oil-state infrastructure, and Trump's re-election chances are zero - without a massive, and almost immediate rescue package.

 

SD

 

 

Liberty Contributor

Liberty

Posted
Posted

As at 4:09 pm EST: WTI is priced at MINUS USD 35.30.

The immediate issue is which big players have bankrupted, and what announcements are we going to hear in the next day or so;

as this will be on par with the collapse of Lehman Bros, and the other US I-Banks, at the start of the GFC.

 

The follow-up will be that if there was hesitation on a NA oil tariff before, it's now gone.

This will have done major damage to US oil-state infrastructure, and Trump's re-election chances are zero - without a massive, and almost immediate rescue package.

 

SD

 

This is big, but not quite what you say. Futures further out (June and July, I think) were still in the 20s last I saw. This is a storage issue for this month's contract because we're close to date when you have to get delivery.

 

https://www.forbes.com/sites/jimcollins/2020/04/20/the-us-oil-etf-uso-is-the-culprit-behind-oils-massive-plunge/?subId3=xid:fr1587412446979iif#141008c724e8

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