WTI Crude Oil May Contract Settled at -$37.63/Barrel)(₹11.50/L)- First Negative on Record


WTI Crude Oil May Contract Settled at -$37.63/Barrel - First Negative on Record

 That is ₹11.50/l
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biggest dropdown in crude oil

This is aesthetically pleasing but from a fundamental perspective this is alarming and surreal.
Stocks trading at session lows after a staggering negative settlement (-$37.63) in CrudeOil $SPX -1.7% $DJI -2.2% $NDX -0.9% $RUT -1.9% $VIX +11.9%

You might say why take it these days? And they had to get out. And when there's the smell of distress in the nostrils of some of the sellers, they took advantage of it,

So I've never seen a penny per barrel for crude oil. We saw that earlier today. I would tell you that in your audience, you have seen the lowest prices you are likely to see in your lifetime, whether or not you're a centenarian or not. And it's probably more realistic to look at the prices for Brent, which are down today, but they're about in the mid 20s.
And I would not infer from this that you're going to necessarily see gasoline or diesel or jet fuel prices dive by a similar amount. These are desperately trapped longs who could not get out of those positions today.

If we do see negative prices, which is extremely likely at this point, how does this complicate things? What does this mean for the average investor? And how could this potentially see even more of a disruption here for the broader market?

It probably doesn't mean that much for the average investor. We've actually seen negative prices before in the energy business. We've seen it for megawatts. We've seen it for natural gas mid-Texas. And we've seen it for propane in Canada after the war tax year.
So we've dealt with that. I don't think most of us ever thought that we were going to deal with negative crude oil prices, certainly not in May of any particular year. And that's the delivery here.
But I think we're finishing up the first third of the year. And you might need a fit to sort of finish the third if you were long in crude oil. And I don't think people should look at this and say we're going to see much more of the same.
Believe it or not, the OPEC Plus meeting did sort of result in a significant agreement. It's not going to help in the second quarter necessarily. But it will help prices recover this summer, and then later this year.
When we do see the prices recover later this summer and later on this year, what's going to get the price of oil moving to the upside? What do we need to see in the broader market in order for us to see some stabilization here?
You're going to see shut ins. I mean, you're at numbers now, really sort of in the teens, and in places like the Bakken in West Texas or whatever-- you know, forget about that future sprint for the moment, and just look at the distressed numbers elsewhere. That's going to shut in production in places like shale.
Almost all the frackers were way, way, way below break even. That's going to shut in production in the oil sands. And it's probably going to shut in production deep water.
You know, after the OPEC Plus meeting, we heard, oh, 9.7 million barrels a day cut-- which starts in May, by the way. We heard the president take credit for a 20 million barrels a day cut. We'll probably see a cut almost on the order of 20 million barrels a day. But it won't be the result of the meeting, or the cartel. It'll be the result of prices driving oil wells to be shut in.
biggest dropdwon in rates of crude oil

Do  we'll see an acceleration of bankruptcies in the energy sector because of this?

Absolutely. I mean, we're going to see a lot of bankruptcies among small energy and exploration companies, and midstream companies, and particularly those with a high debt load. I don't think you'll see anything really impact the major oil companies. But they're coming off a terrible decade, you know, a decade that was really not influenced as much by WTI as the notion of ESG, environmental and social governance.

So you don't have a lot of investment money flowing into anything fossil fuel-related these days. And my suspicion is it's going to be a rough rest of 2020, and even into 2021 as well.

biggest dropdown in prices of crude oil

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