What to Do After the Greatest Collapse in Any Commodity Ever

What happened to oil yesterday was the greatest collapse I've ever seen in any commodity, ever. And barring some unforeseen apocalypse, we'll never see it again. This just doesn't happen in the commodities market. Every once in a while in a stock, sure, you'll get a case of fraud or someone goes bankrupt. The stock will go to $0 over time. In the commodities world, there's a bottom for prices. This doesn't happen. Until it did. Oil futures traded at a negative price for the first time in history. We had the perfect storm for an oil collapse. Demand is down. No one is traveling, and global manufacturing has plummeted. There's a price war. Saudi Arabia drove production way up, and Russia joined them. Now there's estimates of up to 30 million barrels a day of extra oil being produced. Even with a production cut, there will be 20 million barrels a day being produced with nowhere to go. All that oil needs to be stored somewhere, and world is running out of places to put it. Futures contracts are tied to physical delivery of a commodity. Everyone dumped them because they have nowhere to put that oil. No one wants oil right now. And that's why this oil story is so troubling - it's very much a demand story, not an oversupply story... What to Do When No One Wants Oil An oil trading firm in Singapore, Hin Leong, kicked off oil's trouble. Hin Leong buys and sells large super tankers filled with physical oil to distribute through Asia. Sunday night, it told the world it had a non-disclosed $800 million loss from trading oil. To cover the loss, it had to liquidate oil futures - a fire sale. It had to sell... Full Story Sunday night, it told the world it had a non-disclosed $800 million loss from trading oil. To cover the loss, it had to liquidate oil futures - a fire sale. It had to sell... Tags: Oil To get full access to all Money Morning content, click here About Money Morning: Money Morning gives you access to a team of ten market experts with more than 250 years of combined investing experience – for free . Our experts – who have appeared on FOXBusiness, CNBC, NPR, and BloombergTV – deliver daily investing tips and stock picks, provide analysis with actions to take, and answer your biggest market questions. Our goal is to help our millions of e-newsletter subscribers and Moneymorning.com visitors become smarter, more confident investors. Disclaimer: © 2020 Money Morning and Money Map Press. All Rights Reserved. Protected by copyright of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including the world wide web), of content from this webpage, in whole or in part, is strictly prohibited without the express written permission of Money Morning. 16 W. Madison St. Baltimore, MD, 21201. The post What to Do After the Greatest Collapse in Any Commodity Ever appeared first on Money Morning - We Make Investing Profitable .