Direct from the desk of Dane Williams.
"They'll write books about what happened in Oil markets today..."
If you're wondering what on Earth is going in Oil markets today, then you're certainly not alone.
Whether you were born yesterday or 100 years ago, you've never seen price action like today... Because it's never happened before!
Take a look at the price of the May futures contract for Oil.
Oil Futures (May) Daily:
No, your eyes aren't deceiving you.
The line on that chart which price is sitting underneath, is in fact zero.
So how can you have the price of oil below zero?
Well, Oil futures are traded in monthly contracts that each have a delivery point and date, which is in this case tomorrow.
This means that if a trader holds the contract until expiry, they technically have to take delivery of the barrels of oil they've signed a contract to buy.
Under normal conditions, speculators who don't intend to ever take delivery of hundreds of barrels of oil (lolll), have their positions rolled over into the following month's futures contract.
A normally uneventful affair.
But in the midst of a global pandemic where we have the Saudi's flooding the market and demand all but zero, the storage tanks at the contracted delivery point are literally full.
If nobody can store the Oil they're buying, then what are they going to do with it?
So what you're seeing in the May contract, is speculators with no chance of storing a physical commodity that they never intended to actually take delivery of, pay any price to just get rid of the contract that says they have to.
Unprecedented.
Now, with the May contract at expiry, let's take a look at the June contract.
Oil Futures (June) Daily:
Yep, back to $20 just like nothing happened,
And this is why markets, or human beings if you want to look at it this way, are so fucked up.
So this is showing that today people will pay any amount of money just to take their delivery because of oversupply, but in just one month's time, they expect things to be back to normal.
I'm honestly lost for words at how fucked up markets right now.
Best of probabilities to you,
Dane.
FOREX BROKR | Hive Blog
Higher time frame market analysis.
Posted via LeoFinance