Updated: I was right. Just a touch too early. Never did I think I would see the day....

For the first time ever you can now be paid to have oil!!

If you're quick, when the contract expires tomorrow you can be paid $13.98 for holding that barrel. Not bad ey.

In my recent blog post, I outlined the reasons why oil prices were going lower (admittedly, I changed my mind then said higher, then changed my mind again and said lower after the OPEC+ agreement) and turns out I was right.

I was a genius and was short the whole time, netting a $30 profit on each barrel of oil I was short (which for the record was 50).

Not quite. I exited my position as soon as Trump tweeted about a possible Saudi Russia deal.

$1500 missed. Damn.

Anyway the point is this; if you have a thesis, you're fairly sure it's right, stick with it.

That being said, after the announcement of a possible cut I have no regrets about exiting the position as otherwise we would have been way outside of my risk parameters and I would have had to put up margin which would have terrified me.

So what has caused this catastrophic collapse of the price? 

It's quite simple really, this is a contract which expires tomorrow, so if you buy now that oil is going to be turning up on your doorstep, and who really wants barrels of oil right? Unless you've been living under a rock you've heard about the virus and crisis it has caused. There is no demand for oil, essentially buying now is like hoping for a rebound at some point in the future. A barrel of oil is big, takes a lot of room to store - it's expensive too! That's why the price is so low.


Anyway, we live and learn. These are strange times indeed.



Since I started typing: 

Update: 

I had a couple of questions from a few people about what happens to prices now, so I thought I'd add this on to the current blog post on oil.

Essentially, we now have a new futures contract which expires at a later date. Therefore, the price of this contract is positive because people are expecting the demand for the oil to recover as soon as the virus restrictions worldwide are eased.

However, we have already seen some massive drops in the price of this contract, with the price moving aggressively downwards for two days in a row.

The current price for a barrel for delivery on the June contract is around (+) $10.

My expectations are that as we move closer to the deadline for the expiry of the next contract in a month, we see a similar price movement because I do not expect world economies to significantly get back to business by mid-May. Thus, we could see oil sink lower again.