Oil now cheaper than beer

diablo · Apr 20, 2020

A barrel of oil is now cheaper than a pint of beer!

newguy · Apr 20, 2020

At this rate, Wetherspoons will soon have it on tap..

Murray · Apr 20, 2020

How can one, if possible, profit from these lows?

newguy · Apr 20, 2020

Murray said:
How can one, if possible, profit from these lows?

Could always buy stocks in oil companies under the assumption that eventually the only way is up

Murray · Apr 20, 2020

newguy said:
Could always buy stocks in oil companies under the assumption that eventually the only way is up

I have stocks in Shellb, Chevron and Exxon

They're only 5% down on the day though (the US ones), nothing drastic

If they drop more I will buy more

On Etoro it says oil is $21 somehow - https://www.etoro.com/markets/oil

USO is $3.76 - https://www.etoro.com/markets/uso

Ben Thomas · Apr 20, 2020

Oil futures are $22

newguy · Apr 20, 2020

Murray said:
I have stocks in Shellb, Chevron and Exxon

They're only 5% down on the day though (the US ones), nothing drastic

If they drop more I will buy more

On Etoro it says oil is $21 somehow - https://www.etoro.com/markets/oil

USO is $3.76 - https://www.etoro.com/markets/uso

Oh yes of course. Yes that tends to be a common move, to top up in bad times. 5% is still quite a reduction, but I see your point. It doesn't seem like its capable of going much lower!

diablo · Apr 20, 2020

Ben Thomas said:
Oil futures are $22

Depends what futures you are talking about.

US oil futures trading below zero. Sellers have to pay buyers to take it.

https://www.wsj.com/articles/why-oil-is-11-a-barrel-now-but-three-times-that-in-autumn-11587392745

diablo · Apr 20, 2020

Murray said:
How can one, if possible, profit from these lows?

Buy a few barrels and keep them in your shed

Remember this is oil, not oil shares.

Ben Thomas · Apr 20, 2020

diablo said:
Buy a few barrels and keep them in your shed

Remember this is oil, not oil shares.

That really isn't a bad option. Especially if they start paying you to take them away

martin-s · Apr 20, 2020

Don't forget that there are lots of types of oil. How and where it is produced and stored makes a big difference.

Murray · Apr 20, 2020

diablo said:
Buy a few barrels and keep them in your shed

Remember this is oil, not oil shares.

What about USO?

I created an overlay of USO price vs Oil

https://cabotwealth.com/daily/etfs/3-oil-etfs-to-buy/

USO is the best pure-play fund that tracks crude oil prices; it’s the largest, most liquid of futures-backed oil ETFs, with 28 million shares exchanging hands daily and roughly $1.4 billion in assets. Over the past five years USO has had a 0.96 correlation (1.0 is the highest) with crude. That’s a bad thing now – USO is down 45% year to date. However, when oil prices finally bottom, this is the purest way to buy the rebound.

Ben Thomas · Apr 21, 2020

Not a good idea at the moment https://www.nasdaq.com/articles/uso-getting-very-oversold-2020-04-20

websaway · Apr 21, 2020

Can our government prop up the capitalist system that currently exists as it did in the Banking crisis. Branson looking to borrow half a billion from the taxpayer and is offering his Island as security. Should he have maybe not bought the Island and kept the liquidity for a rainy day. Can the mega rich now retain their own private wealth by holding the country to ransom on jobs.

Ben Thomas · Apr 21, 2020

I think Branson can piss off frankly.

websaway · Apr 21, 2020

second thoughts he bought his island for $180, 000 it is now worth $ 60,000,000 should his first option be to sell the Island, he'll take a hit but is that not the same for all of us supporters of capitalism.

Edwin · Apr 21, 2020

USO just fell 25%. One analyst described the movement in the fund as "It's turning into one of the great incinerations of retail money of all time."
https://www.forexlive.com/news/!/heres-why-it-could-get-even-uglier-for-oil-20200421

bonusmedia · Apr 21, 2020

Edwin said:
USO just fell 25%. One analyst described the movement in the fund as "It's turning into one of the great incinerations of retail money of all time."
https://www.forexlive.com/news/!/heres-why-it-could-get-even-uglier-for-oil-20200421

The idea that what goes down must come up again is really no better than the gambler's fallacy.
Normally when folks start saying 'this is a new paradigm' it's a sign that the trend is about to reverse. Now, who knows?
That's the thing about conventions, they're always right until they're not.

dee · Apr 21, 2020

Edwin said:
USO just fell 25%. One analyst described the movement in the fund as "It's turning into one of the great incinerations of retail money of all time."
https://www.forexlive.com/news/!/heres-why-it-could-get-even-uglier-for-oil-20200421

just bought a small amount. No leverage so would need to go to zero (which is possible !)

ian · Apr 21, 2020

The dump as a result of cancellation of May contracts; we are now in June/July contracts but I'm not convinced we'll see a recovery for quite some time. Those companies/industries with the ability to store will be stocked up nicely now (and paid for it); they won't be buying again for a while!