← Back to context

Comment by jedberg

5 years ago

When the price went negative, it made me wonder if I could legally take delivery of barrels of oil in my back yard.

I'd like to assume there are some EPA rules that preclude one from storing barrels of oil just anywhere, but at the same time, the EPA is currently not enforcing any regulations.

I also wondered about delivery on these contracts. Does that include delivery to any address I specify? Can I get paid $3000 to take 100 barrels and ask them to drop it off at my house?

And then what? After the price recovers and I want to sell the barrels, will someone come get them from house?

6 comments

jedberg

Reply
dragonwriter  5 years ago

> When the price went negative, it made me wonder if I could legally take delivery of barrels of oil in my back yard.

Typically, the exchange contract is quite specific about where and how delivery can be made, and “in barrels shipped to your backyard” isn't an option. See, e.g., the delivery procedures here: https://www.cmegroup.com/trading/energy/crude-oil/light-swee...

Also, “barrels” are just a (traditional for the commodity) unit of measure (42 US gallons/35 imperial gallons), not actual containers used for delivery.

betterunix2  5 years ago

Even if the oil came in physical barrels, the contract is for 1000 barrels of oil, so you would need quite a lot of space in your back yard. That quantity is more like a railroad car full of oil. You might be able to arrange for the oil to be put in a tank car and delivered to a train track somewhere if you wanted to try this, though I suspect you would not make nearly as much money in the process as you think.