The "free" oil is only for very short term contracts that are expiring this month (and you have to take delivery of the oil if you are holding the contract).
Longer term contracts are closer to normal, but still historically low.
Those guys forward sell their production as a hedge against just this kind of thing. The holder of the futures contract will be stuck without a chair when the music stops if they can't store it.
Wait five minutes. ETFs that use futures - like USO - are being driven to 0 by front running, as others know they have to roll to later months and Cushing physical storage evaporates, so spreads cannot be arbitraged. USO holds something like 25% of all long June positions.
The "free" oil is only for very short term contracts that are expiring this month (and you have to take delivery of the oil if you are holding the contract).
Longer term contracts are closer to normal, but still historically low.
This is true, but we have capacity in the reserve we can fill now, for the price of moving the oil in.
Expanding the reserve will happen later, on long term contracts.
We do, but it's not a lot more. Here's the current inventory, as of March:
https://www.spr.doe.gov/dir/dir.html
The capacity is currently 797 million barrels.
Trump announced yesterday that the SPR is offering this excess storage capacity, even without purchasing the oil.
Great. That oil will be worth alot more in 3 years when the ruskies and saudis come to their senses
Well the producers can choose. Pay 40 per barrel or you get to donate it for 0. Still a 40 cost saver.
Those guys forward sell their production as a hedge against just this kind of thing. The holder of the futures contract will be stuck without a chair when the music stops if they can't store it.
They are in default and they lose everything. They can have their assets seized to cover the shortfall, including the negative amounts.
Um, today June crashed by half, too. Try to keep up.
Stop being an ass.
Are June contracts negative?
Wait five minutes. ETFs that use futures - like USO - are being driven to 0 by front running, as others know they have to roll to later months and Cushing physical storage evaporates, so spreads cannot be arbitraged. USO holds something like 25% of all long June positions.