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rockfl9

NEGATIVE Oil Price ?????

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Although it is probably meaningless to comment at this time , the report of a negative price for oil was an ERROR.   The lowest price for the sale of ANY commodity  is ZERO CENTS. That would be FREE.  You cant buy  anything for MINUS one cent , There is no way to account for Negative moneys ...  It was probably supposed to be a  -40% drop and got entered in the price field.

THE lowest sale price for oil THIS YEAR was $19.74.

Mark that up to Comodity Trading 101.

Edited by rockfl9

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What went negative, and really DID go negative (i.e this was no reporting / clerical error) was WTI oil futures for delivery in May.  WTI futures are handled with "physical settlement".  That is if you hold the contract when it expires (monthly) you actually get the oil.   Some traders really want this (refiners or users big enough to contract for their own refining like airlines) but most traders do not as they are only there for speculation.  So in the end of April with the virus bringing transportation to a near stand still and oil / fuel storage capacity already full to bursting the buyers actually wanting physical oil weren't buying, thus leaving those holding contracts only for speculation in the position of having to take delivery if they couldn't sell which they are completely unprepared to do.  So they were briefly willing to pay to having others take it,

 

In any market if conditions are right, prices can go negative.  That is when the costs of holding onto a large supply of something is costing the owner more than the item is worth so they pay others to take it.  Perhaps environmental regulations has made its storage very expensive or a past use is no longer allowed.  It's rare but possible.   The oil case is such an example.

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Hello EC..  You maybe correct when it comes to a futures contract.  But it is a stretch of the imagination to think that the deal would have to close for such a impossible  amount .  Surely if someone had that contract for say $41 and sold it for $1 , somebody got that oil for $1 . It was a loss in the contract of $40 BUT the oil sold for $1  NOT MINUS $40.  but that may be the way it had to be reported.. Speculators loose some money in futures but the commodity always gets sold for some amount of REAL money. 

It does remind me of an investment class I had where the prof said " " NEVER invest in futures or CURRENCIES ,leave those to the pros.  

You could end up with a box car of porkbellies !!!

 

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2 hours ago, rockfl9 said:

Hello EC..  You maybe correct when it comes to a futures contract.  But it is a stretch of the imagination to think that the deal would have to close for such a impossible  amount .  Surely if someone had that contract for say $41 and sold it for $1 , somebody got that oil for $1 . It was a loss in the contract of $40 BUT the oil sold for $1  NOT MINUS $40.  but that may be the way it had to be reported.. Speculators loose some money in futures but the commodity always gets sold for some amount of REAL money. 

It does remind me of an investment class I had where the prof said " " NEVER invest in futures or CURRENCIES ,leave those to the pros.  

You could end up with a box car of porkbellies !!!

 

individual loses when a contract is sold do not change the price.  Its only the actually selling price, so in your example it would be $1, very low but not negative.  But for a brief time, NO ONE was buying even at $1, so if you did not want to risk having to make arrangements to actually take possession of the oil, you had to pay to have some one take them.  Folks likely could have just waited another day and there would have been buyers at a very low (but not negative) price as this happened on April 21st or 22nd (something like that) so not at the very very end of the month, but people panicked with a week left ("what if I'm stuck with this...") and paid to get rid of it.

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I am sure there is no negative selling price for anything.. It has to be a quirk in the reporting system !  If some dollars were paid by the holder of the contract then that was the price paid for the oil. Of course the seller did suffer a paper loss.  As with most commodities there is always a dealer waiting to swoop in on a real bargain ..

Back to the RV news.  strange that Ali Alak would publish a report explaining the DEVALUATION process ! And a few economists caught it. Could he be setting things up for a devaluation.. That is not good news for dinarians.  The GOI has always had a financial reporting problem.

One side thinks there is $70B in the treasury and the other says it is only $600M ?  If they do not have enough to pay the bills ( salaries) and cannot or won't borrow to cover , the country ( and it's bank ) will collapse. IQD will be worthless even in Iraq. Even 1500:1 would be a Wonder.

Dinar buy-back ?? could this be another SCAM???   E.g. start a rumor there is a shortage.  AHHA something is going to happen. Now offer a BUY-back .. HAHAAAAA  THEY KNOW SOMETHING... GOTTA GET SUMMORE Dinar . Whoops the price is now $1150. DARN !

Edited by rockfl9

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I've never been a day trader  but i could resist during the sell off panic in March

But i've made some pretty good money during This Covid Joke

Sounds insane bought bought a lot of Carnival Stock at $8.50 and sold at $24.00

Also picked up quite a bit of Exxon at  $32 and sold at $52

Southwest was a good buy at $25.00 and sold at $38.00

keeping an eye out for the next crash.

 

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