Apr 26, 2020
On April 20th, the price of a WTI (West Texas Intermediate) futures contract representing 1000 barrels of oil went to negative -$37 a barrel. How is it possible that you could theoretically be paid to buy oil? How do oil futures work and how storage of oil works with regard to the futures market? The quick answer is, no you cannot buy a single barrel of oil and store it in your garage. Plus, using a silly Ikea couch example to explain why people would pay you to take their oil.
How did the price of oil go negative?
What is the difference between WTI and Brent Crude Oil?
Storing oil in Cushing Oklahoma
Size of 1 oil futures contract (1000 barrels)
Problems with trying to store an oil barrel
Difference between taking physical delivery of oil and speculation
USO exchange traded product methodology
Contango vs. Backwardation in futures market
Rolling front month contracts forward to next month
When does USO roll their front month contracts
Mentioned in this Episode:
Bloomberg funny article “That Time I Tried to Buy an Actual Barrel of Crude Oil” https://www.bloomberg.com/news/articles/2015-11-03/that-time-i-tried-to-buy-some-crude-oil
WTI Oil Futures Prices by Month https://www.marketwatch.com/investing/future/crude%20oil%20-%20electronic
Contact Derek www.razorwealth.com
Derek Moore’s book Broken Pie Chart https://www.amazon.com/Broken-Pie-Chart-Investment-Portfolio/dp/1787435547/ref=sr_1_1?keywords=broken+pie+chart&qid=1558722226&s=books&sr=1-1-catcorr