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Oil price negative?


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Oil price negative?

  #121 (permalink)
 
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 SMCJB 
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Pa Dax View Post
I really like the term long squeeze, because that is exactly what it was.


SunTrader View Post
Long

One question: Why?

I think a lot of people thought it could never go negative and as such when it got down to very low prices they thought it was a heavily asymmetrical bet. That buying say 70c was like buying a $0 call for 70c. I think @bassa has kind of implied that's what he was doing. I'm sure it happened 1000s of times over, and then people paniced when they realized the truth.

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  #122 (permalink)
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Didn't realize you were talking about different contracts in the second paragraph. "Mini" threw me a bit too, since the WTI contract with which I am familiar is the full 1,000 Brl. Thanks.

Ah, I don't trade WTI on ICE so I didn't realize that WTI@ICE was full size unlike QM@COMEX. Good to know, thanks.

I hate to flood this thread but still really interested if anyone knows what FCM was allowing retail traders to actually have CL positions all the way into Tuesday. I have seen multiple stories of this and don't think they are fake (although I would like to believe so).

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  #123 (permalink)
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IB, TDA and some other brokers allow futures in IRAs with the assumption that you cannot lose more than your starting capital, otherwise you would have negative equity in an IRA account which would not be allowed by the IRS or FINRA. So it seems to me the liability is with the broker or CME.

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  #124 (permalink)
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According to IB conference call, QMK20 on CME Nymex and WTI on ICE were allowed. With US retail brokers like TDA and Schwab, most likely they were allowed to open and clse QM front month positions, with CL being closing only.



NotKenGriffin View Post
Ah, I don't trade WTI on ICE so I didn't realize that WTI@ICE was full size unlike QM@COMEX. Good to know, thanks.

I hate to flood this thread but still really interested if anyone knows what FCM was allowing retail traders to actually have CL positions all the way into Tuesday. I have seen multiple stories of this and don't think they are fake (although I would like to believe so).


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  #125 (permalink)
 
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Reposting from funny pictures thread as it seems appropriate

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  #126 (permalink)
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SMCJB View Post
I think a lot of people thought it could never go negative and as such when it got down to very low prices they thought it was a heavily asymmetrical bet. That buying say 70c was like buying a $0 call for 70c. I think @bassa has kind of implied that's what he was doing. I'm sure it happened 1000s of times over, and then people paniced when they realized the truth.

Well I think a lot people never swim against the tide, especially a close to parabolic one.

No matter how "low" or how "high".

As well as the CME gave notice negative prices were a possibility.

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  #127 (permalink)
 
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Continental Resources, Inc letter to the CFTC and CME regarding CL trading on Monday 20th April

https://s3.amazonaws.com/content.newsok.com/documents/CFTC%20Letter%20-HH%20-%2004.21.2020.pdf

TLDR:- They claim something suspicious happened!

More Seriously :- Their claim that this "materially impacts the Calendar Monthly Average (CMA) pricing of the physical barrel" is actually a valid one. Most derivative Transactions between Producers and Swap Dealers are based upon the "Calendar Month Average of the prompt month NYMEX Crude Contract" and many physical deals are priced plus or minus to that average. Continental are probably selling a lot of oil based upon that average. So with 21 business days in April it's easy to see how Monday's print lowered the monthly average by over $2 barrel. Unfortunately they probably should have done some research into what the Bachelier model is. They act like it was a wild HFT algorithim that went wrong when in reality its just a different model to price options!

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  #128 (permalink)
 GFIs1 
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Two articles in CNN about negative oil and its effects bring it to the point

https://edition.cnn.com/2020/04/20/business/oil-price-crash-bankruptcy/index.html
https://edition.cnn.com/2020/04/22/business/negative-oil-prices-spike/index.html

Discussion:
It is assumed that "corona virus" is the reason why WTI oil - more than Brent - are in trouble and oil companies might go bankrupt.
Of course this is NOT the case. There are petrol heads thinking the world turns only because of consuming more and more of this never ending source of that stinky black mud.
Unfortunately several depending industries like car makers, ship makers, plane makers have no clue how to make it more friendly for a green world. All those companies might get in trouble too when countries put the finger on the limits of harmful emission on engines and will set large fines by doing so.
To sum it up - oil depending products will have a difficult future - be it by grounded vehicles flying or in the streets: Corona just shows us that live is possible even the engines haven't started.

Highly possible that investments in oil and its derivatives very soon will be no longer money makers.

GFIs

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GFIs1 View Post
Two articles in CNN about negative oil and its effects bring it to the point

https://edition.cnn.com/2020/04/20/business/oil-price-crash-bankruptcy/index.html
https://edition.cnn.com/2020/04/22/business/negative-oil-prices-spike/index.html

Discussion:
It is assumed that "corona virus" is the reason why WTI oil - more than Brent - are in trouble and oil companies might go bankrupt.
Of course this is NOT the case. There are petrol heads thinking the world turns only because of consuming more and more of this never ending source of that stinky black mud.
Unfortunately several depending industries like car makers, ship makers, plane makers have no clue how to make it more friendly for a green world. All those companies might get in trouble too when countries put the finger on the limits of harmful emission on engines and will set large fines by doing so.
To sum it up - oil depending products will have a difficult future - be it by grounded vehicles flying or in the streets: Corona just shows us that live is possible even the engines haven't started.

Highly possible that investments in oil and its derivatives very soon will be no longer money makers.

GFIs

You are spot on...if this race on the beaches of Florida had turned out differently we would not be having Oil issues at all...maybe something else but not emission issue.

100 years since Stanley broke the Land Speed Record with steam power. Leigh Dorrington relates the story behind the unlikely bid and attempts to repeat it in ’06

Bonneville and the Black Rock Desert; before Daytona Beach or Pendine Sands in Wales, the Land Speed Record belonged to an exclusive turn-of-the-century holiday resort— Ormond Beach, Florida.

Ormond Beach is located on a barrier island separating the Halifax River from the Atlantic Ocean north of Daytona Beach. The grand Ormond Hotel opened in 1888 and, by the beginning of the 20th century, Ormond Beach was a popular winter resort for some of the wealthiest and most powerful families in America. The wide and hard-packed sands stretched 27 miles south from Ormond to the Ponce Inlet below Daytona Beach. Just a half-mile from the hotel, the sands made for a natural racetrack.

There were no paved roads: visitors to Ormond travelled on a railroad, built by Henry Flagler, that ran from St Augustine to the Florida Keys and made possible the development of Florida’s east coast. Along with trunks and household staff, winter visitors also brought amusements to fill the balmy, breezy Florida days. One of these was the automobile.

The first motor car was reputedly brought to Ormond Beach in 1900. Bicycle racer William J ‘Senator’ Morgan was the organiser of annual automobile races from 1903 to 1910 that quickly drew international attention. Some of the earliest cars raced on the beach included the Winton ‘Bullet’ and the Oldsmobile ‘Pirate’, as well as an American 70hp Peerless racer driven by Joe Tracy that was designed to participate in the Gordon Bennett race. Twenty-five-year-old William K Vanderbilt Jnr drove a 90hp Mercedes.

The most revolutionary car to race at Ormond Beach in 1905 was a steam-powered device called the ‘Wogglebug’ that was built and driven by Louis Ross, an employee of the Stanley Motor Carriage Co.

Stanley — whose cars were widely known as ‘Stanley Steamers’ — was one of many manufacturers of steam cars in the US at the beginning of the 20th century. Stanley was not the largest producer of steam cars, but its machines were designed to be lighter and faster than those of rival companies.

Brothers FE and FO Stanley were identical twins who developed a dry-plate photography technique that was eventually sold off to Eastman-Kodak. Their interest in steam began as a hobby, and they built their first car near their Massachusetts home in 1897.

The Stanleys sold their first steam car in 1899, and almost immediately the company was acquired by investors who changed the name to the Locomobile Company of America. Production soon moved to Bridgeport, Connecticut, where Locomobile turned to building gasoline-powered cars in 1905.

FE and FO re-entered the steam car business in 1901. Between 1901 and ’25 Stanley built a confusing array of steam cars that ultimately totalled over 60 different models. The earliest cars resembled the buggies they were based on with the steam boiler, water tank and engine mounted under the seat. Beginning in 1905, Stanley introduced a new car that became the classic Stanley style: the boiler moved to the front of the car and was covered by a distinctive rounded bonnet. These ‘coffin-nose’ Stanleys remained in production until 1915.

One of the early advantages of steam cars was their simplicity. Steam power — for railroads, ships and production of electricity — was a highly developed and familiar technology, while the internal combustion engine was not. A steam engine is an external combustion engine; power is produced as steam in a boiler and transported by a steam line to a simple engine that is little more than a pair of pistons attached to connecting rods that transfer power to a rotating shaft.

Starting a steam car required only pumping up fuel pressure to light the boiler, waiting for the steam pressure to come up to operating level and motoring off. Another substantial advantage of a steam car was the tremendous amount of torque the engine produced compared to an internal combustion unit. While horsepower ratings for steam engines were always questionably low, torque was another matter. Modern tests have shown over 6751b ft of torque at 800rpm from a Stanley steam engine rated at 20hp.

The process of starting a steamer could take 20 minutes, but this was not particularly onerous compared with the preparation and hand cranking required for a gasoline car at the time. The invention of the electric starter for petrol engines in 1911 changed this, however.

With a simpler starting procedure for gasoline cars, drivers became more aware of other drawbacks of steam cars in comparison. One problem was that oil mixed with exhaust steam could make it unpleasant to follow behind a steam car. The solution to this problem was to fit a condenser to the boiler, creating a closed system, which Stanley did beginning in 1915. Another was weight and power. With ongoing refinement and development Stanleys became heavier and lost much of their early power advantage. The era of the steam car was already ending by 1915, although Stanley production continued for another 10 years.

At Ormond Beach in 1905, Louis Ross and the Wogglebug found themselves matched against new 90hp Mercedes for WK Vanderbilt and New York stockbroker ER Thomas, and a 90hp Napier owned by SF Edge and driven by Arthur MacDonald. The four competed in a series of three heat races for the ‘one-mile championship of the world’ and the Dewar Trophy. Ross’s car was powered by two Stanley steam engines. Some reports describe that each engine was connected to a rear wheel, with throttles that were operated separately. This resulted in the car proceeding down the course in an erratic line that gave the Wogglebug its name. Ross’s steam car was rated at only 20hp compared with 90hp for the European cars, seeming to give him little chance against the larger cars. But Ross took advantage of steam cars’ ability to deliver full torque instantly and won decisively at a speed of 94.7mph. An amateur racer in a ‘home-built’ had defeated Mercedes and Napier.

The Stanley brothers also raced, intermittently but successfully: the Stanley ‘Torpedo’ was campaigned in the north-east by FE Stanley. Two cars were built in 1905 for the Vanderbilt Cup races on Long Island, but were not raced. A special racer was also developed for the 1906 Ormond Beach events. This car was radical in every aspect.

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  #130 (permalink)
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https://www.motorsportmagazine.com/archive/article/april-2006/70/boiler-vroom

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