Canadian Oil Prices Turn Negative

[Uncled]

Canadian oil prices turn negative - producers are paying buyers to take the stuff off their hands.

https://www.huffingtonpost.ca/entry...9db09fc5b66d9882238186?utm_hp_ref=ca-homepage

Awesome! When will gas stations start paying me to fill up my tank? :biggrin1:

 

[Dave in Phoenix]

I believe the article is a bit misleading. "Physical oil" did not go negative only front end May futures that settle tomorrow. It appears it was due to speculator investors not oil companies that were caught. They had no way of taking physical delivery so had to dump their future positions - they had no choice since they own no storage or way to actually take delivery of real oil.

The June futures which settle Mid May are at about $20 but could the same issue as the settlement date comes. In the US our shale oil needs about $40-$50/brl just to break even. Alberta may need higher prices (not up on Canadian oil which is inferior heavy oil compared to lighter US shale crude.

 

[chico1]

Why are prices on the gas stations still above 90c?

 

[Dave in Phoenix]

Why are prices on the gas stations still above 90c?

There are a lot more costs and profits that have to be added between the price of oil and what shows up at the pump. First of all the gas you buy today was produced many months ago. It then had to pay a pipeline to transport it to a hub, i.e. Cushing OK in the US where it connects with regional pipelines to a retail storage tank. Then you need a gas truck to deliver and pump into the local gas station tanks that are connected to the pumps. There are profits and costs at each step. I think from Alberta it is even more complex since less major pipelines do distribute across Canada.

 

[g eazy]

There are a lot more costs and profits that have to be added between the price of oil and what shows up at the pump. First of all the gas you buy today was produced many months ago. It then had to pay a pipeline to transport it to a hub, i.e. Cushing OK in the US where it connects with regional pipelines to a retail storage tank. Then you need a gas truck to deliver and pump into the local gas station tanks that are connected to the pumps. There are profits and costs at each step. I think from Alberta it is even more complex since less major pipelines do distribute across Canada.

Kudos for responding again even though the guy didn't even read your first post.

 

[jgg]

Why are prices on the gas stations still above 90c?

Taxes.....

 

[alexmumford]

There are a lot more costs and profits that have to be added between the price of oil and what shows up at the pump. First of all the gas you buy today was produced many months ago. It then had to pay a pipeline to transport it to a hub, i.e. Cushing OK in the US where it connects with regional pipelines to a retail storage tank. Then you need a gas truck to deliver and pump into the local gas station tanks that are connected to the pumps. There are profits and costs at each step. I think from Alberta it is even more complex since less major pipelines do distribute across Canada.

and dont forget crude oil and gas for your car not the same and lots of processing in between

 

[storm rider]

Just more fear mongering in the futures markets....keep in mind this is money speculatively invested on paper contracts not literally say 20,000 physical barrels of oil nor could you actually get 20,000 physical barrels of oil as you would have to pay for those 20,000 steel barrels to hold that oil.The same goes for ALL commodities like say gold/silver/wheat/coking coal/iron ore and so forth.Prices for all of those fluctuate on a daily basis and if you like to gamble you can do so.

Back in 2008 if you bought futures in coking coal in early 2008 when it was $95 a tonne when it got ramped up to $300 a tonne you were sitting pretty.

SR

 

[appleomac]

Just more fear mongering in the futures markets....keep in mind this is money speculatively invested on paper contracts not literally say 20,000 physical barrels of oil nor could you actually get 20,000 physical barrels of oil as you would have to pay for those 20,000 steel barrels to hold that oil.The same goes for ALL commodities like say gold/silver/wheat/coking coal/iron ore and so forth.Prices for all of those fluctuate on a daily basis and if you like to gamble you can do so.

Back in 2008 if you bought futures in coking coal in early 2008 when it was $95 a tonne when it got ramped up to $300 a tonne you were sitting pretty.

SR

Commodities futures are settled in the commodity in question. It's not just paper contracts, those paper contracts are settled in real life physical delivery of said commodity. If the fear of having to take delivery was not real, people would not be trying to pay others to unload their positions. Yes, speculators can get involved because futures contracts are tradeable - but make no mistake about it, one party to that contract will have to take delivery of the physical commodity. You are confusing futures contracts with other types of derivative securities that are purely financial - meaning settlements in cash.