US oil price below zero for first time in history
...West Texas Intermediate, the US marker, lost more than 250 per cent on Monday to trade as low as -$40.32 a barrel in a day of chaos in oil markets. Traders capitulated in the face of limited access to storage capacity across the US, including the country’s main delivery point of Cushing, Oklahoma.
The collapse will be a blow to US president Donald Trump ...
Does this mean they market is finally pricing oil correctly, ie, as a net negative for the planet?
Time to start a business buying oil and injecting it back into the ground!
@natecull Sadly, no. Mostly that futures contracts expiry exceeds available storage / demand / transport capacity. Expect to see extraction rates fall massively. And some bankruptcies / defaults. With ripples of a Tohoku nature.
It does seem naively like "well then just stop making more of your product if nobody's buying it" would be a solution to "help our tanks are full".
But I'm not an oil genius or a finance genius so there are probably technical reasons why they just can't stop and why doing the sensible thing automatically blows up the economy.
@natecull Supply pipeline lags, literally.
@natecull Why The World Is Still Pumping So Much Oil Even As Demand Drops Away
... production is decreasing — just not fast enough. ... Crude in a pipeline can take weeks to reach its destination ... oil purchased in mid-March could still be in transit in mid-April ... it takes time for oil producers to start turning off existing wells ... [wells] shut down can be hard to turn back on ... leases [may] require them to drill the land in question ...
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