I know in 2020 we have all become a bit numb to bizarre things happening, but the price of a barrel for West Texas crude oil dropped to negative $39.55 today. Yes, the producers are paying people to take it off their hands as storage facilities are at max capacity.
Before you get the speculator’s itch of trying to get rich by trading oil futures, I feel compelled to fill you in that the June oil futures contract is still trading at $21 a barrel and the futures price of a January 2021 contract is around $33-$34 a barrel. What does this mean? If you buy a January 2021 futures contract and the spot price of oil at expiration is around $33-$34 a barrel, you probably won’t make any money.
Imagine getting in a time machine and going back to 2008 and making the following predictions:
“NOT ONLY WILL A BARREL OF OIL COST $0 IN 2020, THEY WILL ACTUALLY PAY YOU TO TAKE IT!” (Oil was $130-$140 a barrel in 2008)
“THE DOW JONES WILL REACH 29,000+ BY 2020!”
“A 10 YEAR US TREASURY NOTE WILL YIELD LESS THAN 0.75% IN 2020!”
“THE UNITED STATES WILL HAVE 106 MONTHS OF CONTINUOUS JOBS GROWTH AND THEN LOSE THE ENTIRETY OF ALL THE JOBS CREATED WITHIN A 4 WEEK SPAN”
“THE CUBS WILL WIN THE WORLD SERIES IN 2016 AND DONALD TRUMP WILL WIN THE PRESIDENTIAL ELECTION!”
Nobody would listen to you, and they would probably have you locked into mental health facility.