Comment by cbanek
5 years ago
Well, this aged well:
"The story of how I came to own physical oil begins in late 2008, when fallout from the financial crisis spurred the crude market into severe contango—meaning the price of oil for future delivery was higher than the expected price of immediate “spot” delivery. While contango is the usual and persistent state of the oil futures curve, this particular "super" version helped create the perfect conditions for an almighty oil storage trade as the price of crude for future delivery vastly eclipsed the cost-of-carry and storage expenses of petroleum bought in the spot market."
This is exactly where we are now, only the prices are much lower and the demand even weaker?
I remember reading this the first time it came out. Only better the second time.
More or less, though it should be pointed out that the negative prices yesterday were for futures contracts that trade in 1000 barrel increments (roughly a railroad tank car) and not some tiny amount (like a blue barrel).