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Everybody freaking out about WTI crude prices. Isn't Brent Crude still the benchmark?
Posted on 4/20/20 at 1:33 pm
Posted on 4/20/20 at 1:33 pm
West Texas Intermdiate (WTI) crude is bottoming out today. However, there are several other benchmark prices around the world. Usually when the media says crude prices, they mean Brent Crude, which is trading at $25.62 a bbl. The Opec price and many other oil prices are doing much differently than WTI today. Is the major drop in WTI based on media and social media hysterics? Or is there really that big of a problem of a supply glut? I was still under the impression that most of the gulf coast refineries didn't process WTI crude because they weren't all set up to process the light sweet crude from WTI.
This post was edited on 4/20/20 at 1:34 pm
5
Posted on 4/20/20 at 1:36 pm to lowhound
Thanks, if this is true, will opec and brent be soon to follow suit?
Posted on 4/20/20 at 1:37 pm to lowhound
WTI is what is delivered at Cushing Oklahoma so it's still pretty relevant to us. Brent is refined in northwest Europe.
Posted on 4/20/20 at 1:37 pm to lowhound
It's not even WTI spot, it's WTI for May delivery. This has everything to do with speculators not being able to roll their contracts, because there is no market right now for companies to take delivery.
This is a fine example of people freaking out about something they read on facebook and have NO IDEA what they are talking about.
This is a fine example of people freaking out about something they read on facebook and have NO IDEA what they are talking about.
Posted on 4/20/20 at 1:39 pm to LSUFanHouston
quote:
It's not even WTI spot, it's WTI for May delivery. This has everything to do with speculators not being able to roll their contracts, because there is no market right now for companies to take delivery.
This is a fine example of people freaking out about something they read on facebook and have NO IDEA what they are talking about.
The June contracts might hold for a little bit. But it depends on if reopenings happen and then how they go. Unfortunately there is a 2 or 3 week lag in knowing if it makes the pandemic worse and we start this all over again for the July and August contracts.
Posted on 4/20/20 at 1:39 pm to LSUFanHouston
quote:
This has everything to do with speculators not being able to roll their contracts, because there is no market right now for companies to take delivery.
So the specs have to take delivery?
Posted on 4/20/20 at 1:40 pm to LSUFanHouston
Totally with you on the FB freak out but still isn’t good for lots of people employed in the oil and petrochemical industry. Very likely that oil companies and service providers will panic and start laying off like wildfire. It would help if the government would announce a hard date to restart but lately it’s all been doom and gloom.
Posted on 4/20/20 at 1:41 pm to LSUFanHouston
quote:
This has everything to do with speculators not being able to roll their contracts, because there is no market right now for companies to take delivery.
can you break this down even further?
Are speculators worried that the May production has no market value due to current consumption rates?
Posted on 4/20/20 at 1:41 pm to Janky
Yes, or sell the contract
Posted on 4/20/20 at 1:42 pm to Janky
quote:
So the specs have to take delivery?
Short answer is yes. Better get your butt up to Cushing.
Posted on 4/20/20 at 1:44 pm to RJSambola
quote:
Yes, or sell the contract
yup. people who have traded commodities know this well.
Posted on 4/20/20 at 1:44 pm to MapGuy
It’s probably been known for weeks that May has no market value. It probably means storage capacity (SPR and GOM parking lot) is done and whatever juice had was squeezed.
I have no clue and just rambling.
I have no clue and just rambling.
Posted on 4/20/20 at 1:46 pm to RJSambola
quote:
Yes, or sell the contract
What if no one is willing to buy it?
Posted on 4/20/20 at 1:48 pm to LSUFanHouston
quote:Well, yes. But it's still historic and not insignificant.
It's not even WTI spot, it's WTI for May delivery. This has everything to do with speculators not being able to roll their contracts, because there is no market right now for companies to take delivery.
This is a fine example of people freaking out about something they read on facebook and have NO IDEA what they are talking about.
Posted on 4/20/20 at 1:48 pm to Janky
quote:
What if no one is willing to buy it?
Uncle Sam will step in.
Posted on 4/20/20 at 1:55 pm to MapGuy
quote:
can you break this down even further?
Are speculators worried that the May production has no market value due to current consumption rates?
Whoever holds the futures contract is required to take delivery of the oil at a specified date. The contract is an agreement to purchase oil.
Speculators are financial investors, and have no desire to actually take possession of oil. So, as the expiration date approaches, they sell it to a company who actually needs/wants the oil.
The date for May contracts is tomorrow. So after COB tomorrow, whoever holds the contract gets to get over to Cushing to go pick it up (or get it in a pipeline).
Well, right now, none of the normal customers want/need any oil for May delivery. So, there is no market in which the speculators can reasonably sell the contract.
The speculators also really don't want the oil, so now they are in a position of paying people to take the oil.
June contracts are trading in the 25-30 range, which still isn't good, but it's indicative that the market currnetly thinks there will be some demand/storage capacity for oil in June.
Posted on 4/20/20 at 1:58 pm to LSUFanHouston
Anyone got a tanker truck I can lease for 4-6 weeks? Got room to park it in my driveway
Posted on 4/20/20 at 1:58 pm to Janky
quote:
What if no one is willing to buy it?
Then prices go negative, which just happened.
There was a plan for SPR to buy some as they have about 80M BBL excess capacity. But the money / authorization was removed from the stimulus bill, because some politicians hate oil companies, and others thought we didn't need more oil in the SPR than what we already have.
Posted on 4/20/20 at 2:00 pm to Golfer
quote:
Anyone got a tanker truck I can lease for 4-6 weeks? Got room to park it in my driveway
A friend of mine is in the process of ripping out a built-in pool and replacing it. I told him he should hold off a minute and fill that sucker with oil. Think the HOA will mind?
Posted on 4/20/20 at 2:00 pm to Janky
quote:No one was willing, which is why it went negative, right??
What if no one is willing to buy it?
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