Roll Out The (Oil) Barrel! WTI Crashes Below $0 a Barrel With Traders Fleeing May Futures (Spot WTI At -37.63, May Futures At -24.92)

April virus brings May crashes. As in the spot price of WTI crude crashing to -37.63.

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(Bloomberg) — West Texas crude plunged into the negative for the first time ever. WTI has been under extreme pressure as demand has been destroyed by the coronavirus lockdowns and a oil price war between Saudi Arabia and Russia has flooded the market. In addition, a technical oddity kicked in today as traders fled the May futures contract ahead of its expiration tomorrow. The June contract is currently trading for over $22 a barrel in New York.

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May 20 Light Sweet WTI futures are DOWN to -24.92. But at least June and beyond futures prices are positive.

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Should we dance to the Oil Barrel Polka?

Here is the Grateful Dead’s version.

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A physical contract such as the NYMEX WTI has a delivery point at Cushing, OK, & date, in this occurrence May. So people who hold the contract at the end of the trading window have to take physical delivery of the oil they bought on the futures market. This is very rare.

It means that in the last few days of the futures trading cycle, (which is tomorrow for this one) speculative or paper futures positions start rolling over to the next contract. This is normally a pretty undramatic affair.

What is happening today is trades or speculators who had bought the contract are finding themselves unable to resell it, and have no storage booked to get delivered the crude in Cushing, OK, where the delivery is specified in the contract.

This means that all the storage in Cushing is booked, and there is no price they can pay to store it, or they are totally inexperienced in this game and are caught holding a contract they did not understand the full physical aspect of as the time clock expires.

 

WTI Cushing Oil Plunges Below $11, Hotel Occupancy Rate Declines 69.8% YoY To 21% (All Time Record Lows)

My Corona!

The lack of demand for oil (and incredible supply build-ups) had led to WTI Crude oil to fall below … $11!

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WTI Crude (Cushing, OKLA) is now at an all-time low.

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Crude oil prices in the Middle East are … negative?

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On the hotel front (government lockdowns are pretty bad for travel and hotels!), in comparison with the week of 7-13 April 2019, the industry recorded the following:

Occupancy: -69.8% to 21.0%
• Average daily rate (ADR): -45.6% to US$74.18
• Revenue per available room (RevPAR): -83.6% to US$15.61

What I like about the government shutdown of the US economy? NOTHING!

Even Jack Torrance can’t get a drink from Lloyd in the shutdown.

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Sea of Red! Brent Crude Down 12.38% As Dow Closes Down 13% (Or 3,000 Points) Hedging Anyone??

We are in a Sea of Red.

Brent Crude is down 12.38% today while agriculture prices are down too.

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US, Europe and Asia are in red territory. With the Dow down 3,000 points or nearly 13%.

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It seems like a good time to hedge the stock market.

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A scene at your local grocery store.

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Another Trading Day, Another Trading Halt (NASDAQ Opens Down 7%, Europe Down 9%, Brazil Down 11.65%)

Another trading day, another trading halt as NASDSAQ opens down 7%.

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Europe is a sea of red as is Brazil.

Here are the circuit breakers thresholds and time durations:

Level 1 halt (7% decline in S&P 500 index)

  • Trading will halt for 15 minutes if drop occurs before 3:25 p.m.
    At or after 3:25 p.m.—trading will continue, unless there is a Level 3 halt.

Level 2 halt (13% decline in S&P 500 index)

  • Trading will halt for 15 minutes if drop occurs before 3:25 p.m.
    At or after 3:25 p.m.—trading will continue, unless there is a Level 3 halt.

Level 3 halt (20% decline in S&P 500 index)

  • At any time during the trading day—trading will halt for the remainder of the trading day.

Trading has resumed in America. As of 10am EST, Europe keeps crashing (down 10%).

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High yield CDX gets crushed!

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Gold is down 3.82%, silver is down 5.40% and Brent crude is down 6.43%.

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UPDATE:

Dow down >2,000. Eurozone stocks crushed like an oversteamed bratwurst!

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Get to the choppa!

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Cedar Fever! Lebanon Will Default On Its Debt For First Time Ever (10Y yield at 30%, 5Y CDS at 18,400)

Uh-oh.

Beirut, Lebanon Lebanese Prime Minister Hassan Diab announced on Saturday that Beirut will not repay a $1.2bn Eurobond due next week and will instead seek to restructure its massive debt as the country’s dollar reserves dwindle amid an acute financial crisis.

In a televised address to the nation, Diab said the “difficult decision” to default for the first time in Lebanon’s history had been made in order to “secure the basic needs for people”.

Lebanon is in the throes of an economic meltdown rooted in corruption, government mismanagement, a decrepit power sector that bleeds billions from state coffers and the civil war next door in Syria.

As of Friday, the 10-year yield on Lebanon’s sovereign debt soared to 30%. And 5Y CDS soared to 18,400.

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On top of the Lebanon freezes their Eurobond Payment.

(Bloomberg) — Lebanon is about to enter the crucial first phase of talks aimed at renegotiating its $30 billion in Eurobonds after saying at the weekend it won’t pay dollar debt coming due on Monday.

The government’s declaration on Saturday that it won’t repay the $1.2 billion Eurobond puts the country on course for the first default in its history as it copes with dwindling foreign-currency reserves and inflation running in double digits. Talks will be complicated by high foreign ownership of some of the bonds and political divisions that have left the economy on the ropes.

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Is this what Texans call “Cedar Fever”?

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Gold Trading Hits Record High As Treasury 10 Yield Near All-time Low (Swaption Vol Escalates, Fannie’s 30Y Current Coupon Falls Below 2%)

Its a wonderful day in the financial neighborhood! … NOT!

Gold trading hits record high.

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As gold keeps on rising.

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S&P 500 futures are down 3.201%.

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USD Swaption vol is escalating.

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The US Treasury 10-year yield is down another 20 bps.

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Fannie Mae’s 30-year current coupon just fell below 2%.

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What up with that?

The Night Before: US Equities Down 1%, Oil Down 2%, Gold Up 1% (Coronavirus Fear Again)

It is the night before Monday opening.

And it is ugly.

The Dow Jones mini is down 346 points as of 7:30pm EST on Sunday evening.

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Bond market futures are up, meaning yields are down.

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Oil futures are down 2.55%.  And GOLD is up 1%!

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Yes, it is the coronavirus impact global supply chains.

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Or it was Tyson Fury licking Deontay Wilder’s neck in their rematch fight on Saturday night.

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