RE: Investment Thesis20 Apr 2020 20:41
Yep try factoring negative oil futures. So if I take my car to Tesco I can have as much diesel as I want but unfortunately there’s no point coz my tank is full as I haven’t been anywhere!
From CNBC app...
U.S. crude prices dropped more than 100% and turned negative for the first time in history on Monday as traders continue to fret over a slump in demand due to the coronavirus pandemic. The price of the nearest oil futures contract, which expires Tuesday, was the hardest hit, detaching from later month futures contracts, which continued to trade above $20 per barrel.
West Texas Intermediate crude for May delivery fell more than 100% to trade at negative $40.08 per barrel. Meanwhile international benchmark, Brent crude, which has already rolled to the June contract, traded 8.9% lower at $25.58 per barrel. The June WTI contract, which expires on May 19, fell about 18% to trade at $20.43 per barrel. The July contract was roughly 11% lower at $26.18 per barrel.
The front part of the oil futures ‘curve,’ which is the May contract that expires on Tuesday, was hit the hardest since it applies to fuel that’s set to be delivered while most of the country remains on lockdown thanks to the coronavirus. The only buyers of oil futures for that contract are entities that want to physically take the delivery like a refinery or an airline. But storage tanks are filled so they don’t need it.
The spread between the May and June contracts — known as the front month and second month — is now the widest in history, according to KKM Financial’s Jeff Kilburg. “This is a phenomenon due to the expiration of the front month contract coupled with the historic plunge in crude,” he said in an email.
Trek
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