Some thoughts on negative oil price

Means huge opportunities to my style of trading, don't care about the whys, hedge correctly, last trade is best trade. Automation does not take into account of storage or huge unemployment, USA history shows us when times very bad, few make real big money cause they took risk accessed opportunities most won't for some reason.

Don't want to buy crude futures, UCO looking for 1000+% returns.
 
UCO was near $400 on 2/20/20....now hanging around $14... a 96% drop.
Good luck. The good news is there is not a lot of downside left.
 
Looks like these Chinese investors had it just as bad or worse than the long CL May20 accounts liquidated at IBKR.

Investors Commit Suicide After Bank of China’s “Futures Contract of Crude Oil" |CCP Virus|COVID-19

 
syswizard said:
Here is the Bloomberg article where one analyst says we could have a June contract around $-100/BBL.
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Thanks for the Bloomberg article.

I agree with the running out of storage, and I do agree this problem is possible to be traded much more times by the market. However, I think the darkest time of oil price has been gone. The simplest reason is that the long positions holders, the preys destinied to be caught and hunted, were done now. Whatever the explantions for the negative oil price, but the direct and the most essential driving force is the insane selling of long positions. There will be no more such an insane selling for June contract.

Let's see what will happen.
 
Two dynamics:

1. On the Commercial end, zero demand and oversupply to the extent that leased tankers are being used as storage. Refiners are taking very little delivery. No rack space in Cushing, OK.

2. Retail speculators bottom fishing and getting really lit up. They were trading a physically delivered product too damned close to first notice day and with no real understanding of the physical delivery dynamics for Cushing, OK. IMHO, the short time we spent at negative prices were dumb ass retail specs getting auto liquidated at market by their brokers. It is my sense that commercial producers making delivery were very, very thin on the buy side.

As a side note - the forward oil curve has been in severe Contango for months now. I'm not saying that negative prices were easy to see, but it has been fairly obvious that May wasn't going to rally hard and that it was under severe pressure.
 
Something really similar happened to the May 2011 and July 2011 ICE Cotton Futures Contract - but it was a massive short squeeze on, once again - a physically delivered contract with very specific and prescribed delivery specifications. Louis Dreyfus had bought up a massive long futures position with every intention of taking physical delivery.

So as first notice day loomed - many commercials and specs got absolutely blown out. The spike up was immediate and mind numbing on a thin market. The damage to the market was real and it was permanent. Most of the old and famous Memphis Cotton trading firms were wiped out. The market has not been the same since. It's not entirely the futures squeeze at fault - India, China, and Bangladesh are now growing their own domestic Cotton. But it hastened the inevitable.
 
bone said:
Something really similar happened to the May 2011 and July 2011 ICE Cotton Futures Contract - but it was a massive short squeeze on, once again - a physically delivered contract with very specific and prescribed delivery specifications. Louis Dreyfus had bought up a massive long futures position with every intention of taking physical delivery.

So as first notice day loomed - many commercials and specs got absolutely blown out. The spike up was immediate and mind numbing on a thin market. The damage to the market was real and it was permanent. Most of the old and famous Memphis Cotton trading firms were wiped out. The market has not been the same since. It's not entirely the futures squeeze at fault - India, China, and Bangladesh are now growing their own domestic Cotton. But it hastened the inevitable.
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Do you believe in Mnuchin's statement of "several hundred million" barrels of additional storage?
 
Semantics are really important here.

Is there actual Storage capacity at Cushing, OK? Sure. Some.

Will Pioneer or Concho or Exxon sell you or sublet to you their storage capacity? F**k No.


xandman said:
Do you believe in Mnuchin's statement of "several hundred million" barrels of additional storage?
More...
 
bone said:
Something really similar happened to the May 2011 and July 2011 ICE Cotton Futures Contract - but it was a massive short squeeze on, once again - a physically delivered contract with very specific and prescribed delivery specifications. Louis Dreyfus had bought up a massive long futures position with every intention of taking physical delivery.

So as first notice day loomed - many commercials and specs got absolutely blown out. The spike up was immediate and mind numbing on a thin market. The damage to the market was real and it was permanent. Most of the old and famous Memphis Cotton trading firms were wiped out. The market has not been the same since. It's not entirely the futures squeeze at fault - India, China, and Bangladesh are now growing their own domestic Cotton. But it hastened the inevitable.
More...

Thanks for the cotton squeeze story.

As the dwindling of volume and open interest, it seems the WTI market is experiencing some changes right now. IMHO, the most profounding influence of -40$ is people around the world, specially the retail investors, will doubt the authority of WTI pricing and then step out of this market, and some of them actually just have already been wiped out this time. With the changes of participants, the WTI ecosystem should turn to be a different one.

What I'm wondering now is what kind of measures the NYMEX is going to take to rebuild their authority on crude oil pricing, and what the influence it may put on the futures price.
 
You seem like you’re placing the blame on NYMEX. Retail speculators have the responsibility to: 1. Understand their broker’s last trading day policy and position liquidation policy for the particular instruments they are trading, and 2. Understand the delivery and settlement specifications for the particular instruments they are trading.

traderDS said:
Thanks for the cotton squeeze story.

As the dwindling of volume and open interest, it seems the WTI market is experiencing some changes right now. IMHO, the most profounding influence of -40$ is people around the world, specially the retail investors, will doubt the authority of WTI pricing and then step out of this market, and some of them actually just have already been wiped out this time. With the changes of participants, the WTI ecosystem should turn to be a different one.

What I'm wondering now is what kind of measures the NYMEX is going to take to rebuild their authority on crude oil pricing, and what the influence it may put on the futures price.
More...
 
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