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Message
2
Posted on 4/20/20 at 1:45 pm to TNTigerman
quote:It's like paying someone to take your trash away.
I don't get it. How can something of tangible value be negative?
Posted on 4/20/20 at 2:13 pm to TNTigerman
Has to do with storage. If there is nowhere to store it then there is no way to unload it off of barges, ships, etc...
For example a panamax can hold 60,000 DWT so roughtly 450,000 barrels of oil. If the ship arrives and there is no where to offload it then the ship becomes the holding tank. Cost is probably $30,000 to $45,000 per day for a Panamax. This day rate does not stop until that ship is unloaded.
In 90 days you are talking $3M to $4M in day rates for the ship. This is why oil is trading so low. Crude is on ships, barges, and in pipelines all over the world. There is just no place to offload. Guarantee you there will be ships sitting with crude in them for 5-6 months or longer. This is how you end up with negative prices.
For example a panamax can hold 60,000 DWT so roughtly 450,000 barrels of oil. If the ship arrives and there is no where to offload it then the ship becomes the holding tank. Cost is probably $30,000 to $45,000 per day for a Panamax. This day rate does not stop until that ship is unloaded.
In 90 days you are talking $3M to $4M in day rates for the ship. This is why oil is trading so low. Crude is on ships, barges, and in pipelines all over the world. There is just no place to offload. Guarantee you there will be ships sitting with crude in them for 5-6 months or longer. This is how you end up with negative prices.
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