Reconnaissance Energy (Africa) Ltd V.RECO

Massacre Coming

[Oregonduck]

In and around April 2020, the price of U.S. benchmark oil fell more than $50 a barrel to about $30 below zero, the first time oil prices had ever turned negative. Such an eye-popping slide was the result of a quirk in the oil futures market but it underscored the industry’s disarray as the coronavirus pandemic decimated the world economy.

Demand for oil at that time collapsed, and despite a deal by Saudi Arabia, Russia and other nations to cut production, the world ran out of places to put all the oil the industry kept pumping out — about 100 million barrels a day. 

Prices went negative — meaning that anyone trying to sell a barrel would have to pay a buyer $30 — in part because of the way oil is traded. Futures contracts that require buyers to take possession of oil and nobody wanted the oil because there was no place to store it. 

JP Morgan is predicting oil could drop to $65 due to the predicted coming recession and demand destruction.

Oil or no oil, you can stick a fork in Reco.








 

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Mr. Duck you are not that far off; oil did drop to like minus $40 a barrel. There were some bizarre schemes floated; never verified; to store oil in swimming pools in Houston, etc. But these interesting stories aside; this price drop was technical and soon rectified. With demand as high as it currently is I doubt it could ever happen again except on the case of a "Putin Put" where Putin