Oil Alamo: Corona Collapse of Texas Oil Sends Price Below Zero
Listen to "Oil Alamo: Corona Collapse of Texas Oil Sends Price Below Zero" on Spreaker. Today on TruNews we discuss the historic crude Pearl Harbor and how the Nixon-Kissinger petrodollar, as well as the leadership of Saudi Arabia, may not survive in the post-pandemic world order if found guilty of waging economic war against America. We also discuss the rising voices, now including President Trump, who demand answers and “consequences” for the $3.7 million sent by Dr. Fauci’s NIH to the communist bat bioweapons lab in Wuhan. Rick Wiles, Doc Burkhart, Edward Szall. Airdate: 04/20/20
Watch the podcast HERE They are saying that this is an attack on Texas and the Saudis are flooding the US market at the very time when there is no demand
The Saudis have been on the hunt for bargain assets such as Carnival, the cruise liner business.
AG Barr, it turns out was the attorney for the Bushes who are deeply involved with the Saudis, the Bin Ladens and 9/11.
This was a headline from the weekend - the owner hid hundreds of millions of losses from HSBC which is already under threat.
The rich and famous are activating their plans to bug out and take shelter in bunkers. We do not want them down here in New Zealand!
This article highlights plans to build a secret super command bunker 3,500 feet under Washington DC. Are they preparing for war.
Dr. Fauci, who probably has connections with the Wuhan lab is pouring cold water on the idea the coronavirus came from there. Is he part of a fifth column?
This Iranian TV channel is quoting China's official Arabic-language TV to say the coronavirus originated in America.
On the one hand we have this CNN article floating the banning of customers from grocery stores..
....while we have driverless, Chinese cars delivering food to customers. Want to live in such a world?
There is nowhere to store the oil, but someone is obliged to take delivery.
This is what happens when someone has to take delivery and no one wants to because there is nowhere to store the oil.
Those who thought $1 was cheap, thought wrong.
You now get paid as much as $40 to take delivery of oil because no one wants May delivery.
May Delivery
The last day for May delivery trading is today. Traders long the May contract are in deep trouble.
June Crude
The price of crude for June delivery touched $20.19, down from $55.00 in February. Those rolling crude contracts expecting the price to go up have been hammered for months.
The Art of a Failed Oil Deal
Supposedly, Trump saved the oil market with his production cut deal with the Saudis earlier this month.
Update (1425ET): And there it is... May WTI just traded below zero for the first time ever (trading below NEGATIVE $40 per barrel)... There was a small bid right into the settlement at 1430ET leaving the May contract to settle at negative $37.63.
May is down over 300% today...and June is down 18%
There is a lot of chatter that a fund blew up here as the irrational forced selling in the front month - sending the prompt spread to a stunning $60 - suggests at least one major player was buying the dip on the spread and was obliterated today.
A complete collapse of the front-end of the curve...
As Nordea notes, oil markets are likely to remain under pressure from huge unbalances in the physical market, like we also highlighted last week.
Saudi Arabia and Russia are whispering about further production cuts, but we have a hard time getting too enthusiastic about the oil price anyways. There is a real risk that the oil storage capacity is filling up, even with the agreed lower pace of production; maybe already within the next six weeks. Therefore, more production cuts could be needed just to prevent the oil price from crashing further. Better data on new corona cases are probably keeping the oil price “alive” for now, but the physical market tend to matter the most in the end.
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Update (1355ET): Just stunning - the May WTI contract just traded at 1c...
The May contract - obviously - is down 100%...
The WTI curve is in record contango...
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Update (1350ET): WTF WTI! The May contract just traded below $1...
It was $10 90 minutes ago!
The prompt spread (May-June) is now at a record $20...
And now Alaska, Bakken, and Edmonton are all trading negative
Update (1325ET): And just like that, a $2 handle ($2.24) for May WTI...
May is down a stunning 86% today while June - also hammered - is down a mere 11%!
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Update (1250ET): The CME just issued a statement that May WTI Futures can trade negative, which sent the May contract reeling to a $4 handle (low $4.04)...
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Update (1210ET): The May WTI Crude futures contract just crashed to a $7 handle..
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When Goldman's crude oil analysts turned apocalyptic last month, writing that "This Is The Largest Economic Shock Of Our Lifetimes", they echoed something we said previously namely that the record surge in excess oil output amounting to a mindblowing 20 million barrels daily or roughly 20% of the daily market...
... the result of the historic crash in oil demand (estimated by Trafigura at 36mmb/d) which is so massive it steamrolled over last week's OPEC+ 9.7mmb/d production cut, could send the price of landlocked crude oil negative: "this shock is extremely negative for oil prices and is sending landlocked crude prices into negative territory."
We didn't have long to wait, because while oil prices for virtually all grades have now collapsed below cash costs...
... today's historic plunge in WTI - the biggest on record - which sent the price of the front-month future freefalling 40% to just $10/barrel...
... has resulted in selected Canadian crude oil prices now officially turning negative with Canada's Edmonton C5 Condensate deep in the red...
... while the Edmonton Mixed Sweet Blend dipped briefly negative for the first time ever before fractionally rebounding in the green.
In other words, landlocked Canadian oil prdeucers - who don't have easy access to expandable tanker storage - are now paying their customers to take the oil off their hands!
Why the historic plunge in the front-end? Simple: it shows the real demand and how much storagecapacity there is for actual physical oil (virtually none), as opposed to speculating on future oil prices and hopes for a recovery, which however with every passing month will get dragged to the catastrophic spot (current-month) price. As such, where the May contract - which matures tomorrow - prices will show what the market for physical delivery looks like but as Adam Button notes, "the June contract is also increasingly ugly as it approaches the cycle low" adding that "so far retail keeps buying the dip but I think there's a rising chance they puke it in the days ahead."
And while retail keeps hoping that the Fed will somehow start buying crude next, Button is absolutely correct.
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