Episode 235 - Oil goes negative! How, why and what it tells us.

Welcome to the Crypto Basic Podcast! This time around we're going over a truly unexpected turn of events which baffled even the most economically savvy of us (Karim. That's just Karim.) Oil went negative! A never before seen event, we try to make sense of it and pose the important questions: 1. What the hell? 2. What's the reason? 3. What will the repercussions be? All of this and more on today's show, so tune in now!Interesting topic to learn about and extrapolate fromWe have just witnessed an oil price crash like never before taking prices of West Texas Intermediate into deeply negative territory.WTI Crude Oil Spot Price is the price for immediate delivery of West Texas Intermediate grade oilreached minus US$40.32 a barrelHow can a price turn negative?industry has not been able to slow production fast enough to counter the drop in demand.global demand for oil has reduced by 29 million barrels a day (100 to 71)Storage can stabilize prices, but its nearing capacityWT mainly stored at Cushing Facility in OK, now almost full62m Barrel capacity - Can fill half tanks in the USWorlwide, current rates of supply/demand have estimates of inventories increasing by 1.6B barrels in first half of 2020, but only 1.6B barrel capacity still availableContext - Amount of production that could be stored if exports dry upUS - 30 days, SA - 18, Russia - 8Nigeria, largest producer in Africa....1.5 daysTraders with contracts to take delivery of oil in May fear they won't be able to store it. They are willing to pay not to have to take it and have nowhere to put it.June contracts and later are still positive, so supply demand imbalance may be correctedFun Trivia - Guess what the name of the other price benchmark for oilIt stayed around $25, they can be put on ships and taken to storage anywhereResponsesHalliburton (oilfield engineering) said that the pandemic has created so much turmoil in the industry that it "cannot reasonably estimate" how long the hit will last.OPEC-Plus - Responded by cutting output by 9.7m barrels per day, which ends the duel between Russia and SABut note still significantly less than the drop in demandOil importing countries taking advantage and filled up what they could in storageInvestors using Giant oil tankers for storageRecord 160m barrels stored this way, each can hold up to 2m barrels.Of course this is bidding up charter rates, more than doubling to $350,000 a dayLast time we saw something close was 2009, about 100m barrelsShiff Quote on GoldThe oil price is now negative $3 per barrel. What is happening now in the #Oil market will soon happen in reverse in the #gold market. In oil the shorts are trying to deliver, but the longs don't want it. In gold the longs will try to take delivery, but the shorts won't have it!SourcesUnderstanding what just happened with oil pricesOil crash explained: How are negative oil prices even possible?The world's on the brink of running out of places to put oilSupertankers drafted in to store glut of crude oilWhy TikTok is Now the No. 1 Social Media App