>>> IT WAS JUST A WEEK AGO
>>> IT WAS JUST A WEEK AGO PRESIDENT DONALD TRUMP WAS
PRESIDENT DONALD TRUMP WAS BRAGGING ABOUT EFFORTS TO
BRAGGING ABOUT EFFORTS TO INCREASE OIL PRICES BY WORKING
INCREASE OIL PRICES BY WORKING ON A DEAL BETWEEN HIS GOOD
ON A DEAL BETWEEN HIS GOOD BUDDIES THE STRONG MAN THAT’S
BUDDIES THE STRONG MAN THAT’S AHEAD OF RUSSIA AND SAUDI
AHEAD OF RUSSIA AND SAUDI ARABIA.
ARABIA. THEY PRAISED THE PRESIDENT FOR
THEY PRAISED THE PRESIDENT FOR SAVING SHALE PRODUCERS.
SAVING SHALE PRODUCERS. THAT WAS A WEEK AGO.
THAT WAS A WEEK AGO. TODAY IT PLUNGED INTO NEGATIVE
TODAY IT PLUNGED INTO NEGATIVE TERRITORY.
TERRITORY. THE PRICE IS NEGATIVE $37 A
THE PRICE IS NEGATIVE $37 A BARREL DOWN 305% MEANING PEOPLE
BARREL DOWN 305% MEANING PEOPLE WOULD PAY YOU TODAY TO TAKE
WOULD PAY YOU TODAY TO TAKE THEIR OIL OFF THEIR HANDS.
THEIR OIL OFF THEIR HANDS. IT IS ACTUALLY THE FIRST TIME IN
IT IS ACTUALLY THE FIRST TIME IN THE OIL MARKET THIS HAPPENED.
THE OIL MARKET THIS HAPPENED. WHAT EXACTLY DOES IT MEAN?
WHAT EXACTLY DOES IT MEAN? WHY DID IT HAPPEN?
WHY DID IT HAPPEN? HAPPEN
HAPPEN WHAT HAPPENS NEXT?
WHAT HAPPENS NEXT? WE GO TO STAN DICKER, THE
WE GO TO STAN DICKER, THE FOUNDER AND HOST OF THE ENERGY
FOUNDER AND HOST OF THE ENERGY WORD AMONG OTHER THINGS AND DAN,
WORD AMONG OTHER THINGS AND DAN, I HAD ONE OF MY LIFELONG
I HAD ONE OF MY LIFELONG BUDDIES, SAID I GOT TO HEAR FROM
BUDDIES, SAID I GOT TO HEAR FROM DAN ABOUT THE NEGATIVE OIL
DAN ABOUT THE NEGATIVE OIL PRICES.
PRICES. HERE YOU ARE.
HERE YOU ARE. WHY DID OIL GO NEGATIVE TODAY?
WHY DID OIL GO NEGATIVE TODAY? WHAT HAPPENED?
WHAT HAPPENED? >> WELL, BASICALLY WHAT YOU HAVE
>> WELL, BASICALLY WHAT YOU HAVE IS YOU HAD THE CORONAVIRUS WHICH
IS YOU HAD THE CORONAVIRUS WHICH KILLED DEMAND.
KILLED DEMAND. ONE OF THIRD OF DEMAND HAD COME
ONE OF THIRD OF DEMAND HAD COME OUT OF THE GLOBAL MARKET BUT A
OUT OF THE GLOBAL MARKET BUT A THIRD OF SUPPLY HASN’T COME OUT
THIRD OF SUPPLY HASN’T COME OUT OF THE GLOBAL MARKET DESPITE THE
OF THE GLOBAL MARKET DESPITE THE GREAT DEAL PRESIDENT TRUMP
GREAT DEAL PRESIDENT TRUMP MANAGED TO PUT TOGETHER FOR 10
MANAGED TO PUT TOGETHER FOR 10 MILLION BARRELS.
MILLION BARRELS. 30 MILLION BARRELS OF OIL IS THE
30 MILLION BARRELS OF OIL IS THE SURPLUS THAT WE HAVE RIGHT NOW,
SURPLUS THAT WE HAVE RIGHT NOW, BUT 10 MILLION BARRELS IS WHAT
BUT 10 MILLION BARRELS IS WHAT IS CUT.
IS CUT. SO THERE IS 20 EXTRA MILLION
SO THERE IS 20 EXTRA MILLION BARRELS SLOSHING AROUND WITH NO
BARRELS SLOSHING AROUND WITH NO PLACE TO GO.
PLACE TO GO. THE STORAGE IS FILLED UP.
THE STORAGE IS FILLED UP. WHEN THE STORAGE IS FILLED UP,
WHEN THE STORAGE IS FILLED UP, THERE IS NOBODY WHO WANTS THE
THERE IS NOBODY WHO WANTS THE OIL.
OIL. YOU HAVE TO PAY PEOPLE TO TAKE
YOU HAVE TO PAY PEOPLE TO TAKE IT AWAY AND THAT’S WHAT YOU SAW
IT AWAY AND THAT’S WHAT YOU SAW TODAY IN THE SPOT MARKETS IN
TODAY IN THE SPOT MARKETS IN CRUDE.
CRUDE. >> RIGHT.
>> RIGHT. SO I READ THAT LIKE THESE ARE
SO I READ THAT LIKE THESE ARE FUTURES CONTRACTS THAT CLOSE ON
FUTURES CONTRACTS THAT CLOSE ON MAY AND WHEN THE CONTRACT
MAY AND WHEN THE CONTRACT CLOSES, LIKE YOU GOT TO DELIVER
CLOSES, LIKE YOU GOT TO DELIVER THE OIL TO A SPECIFIC PLACE,
THE OIL TO A SPECIFIC PLACE, THIS IS WEST TEXAS CRUDE.
THIS IS WEST TEXAS CRUDE. SO IT’S GOT TO GO TO OKLAHOMA SO
SO IT’S GOT TO GO TO OKLAHOMA SO THERE IS ACTUALLY A BOTTLENECK.
THERE IS ACTUALLY A BOTTLENECK. YOU DON’T -- THERE IS NOT THE
YOU DON’T -- THERE IS NOT THE SPACE TO OFF LOAD ALL THIS OIL.
SPACE TO OFF LOAD ALL THIS OIL. >> RIGHT.
>> RIGHT. THE FUTURES MARKET AS YOU KNOW
THE FUTURES MARKET AS YOU KNOW IS A FINANCIAL SYSTEM SO MONEY
IS A FINANCIAL SYSTEM SO MONEY CHANGES HANDS BUT WHEN WE GET TO
CHANGES HANDS BUT WHEN WE GET TO THE END OF TIME WHEN THE
THE END OF TIME WHEN THE CONTRACT IS ACTUALLY DUE, WE
CONTRACT IS ACTUALLY DUE, WE HAVE TO TURN THIS INTO REAL
HAVE TO TURN THIS INTO REAL PHYSICAL OIL AND THAT CHANGES
PHYSICAL OIL AND THAT CHANGES THE GAME ENTIRELY AND YOU NEED
THE GAME ENTIRELY AND YOU NEED TO HAVE PEOPLE WHO ACTUALLY TAKE
TO HAVE PEOPLE WHO ACTUALLY TAKE IT OR GOING TO DELIVER IT.
IT OR GOING TO DELIVER IT. RIGHT NOW, NOBODY WILL TAKE IT.
RIGHT NOW, NOBODY WILL TAKE IT. >> SO WHAT DOES THIS MEAN?
>> SO WHAT DOES THIS MEAN? ARE THE REVERBERATIONS?
ARE THE REVERBERATIONS? I HEARD OKAY, THIS IS JUST THE
I HEARD OKAY, THIS IS JUST THE END OF MAY CONTRACTS ARE LOOKS
END OF MAY CONTRACTS ARE LOOKS DICEY BUT FUTURE CONTRACTS AFTER
DICEY BUT FUTURE CONTRACTS AFTER THAT, IT WILL COME BACK UP BUT
THAT, IT WILL COME BACK UP BUT OIL WILL BE CRUSHED FOR THE
OIL WILL BE CRUSHED FOR THE FORESEEABLE FUTURE, RIGHT?
FORESEEABLE FUTURE, RIGHT? WHAT DOES THAT MEAN MORE
WHAT DOES THAT MEAN MORE GENERALLY?
GENERALLY? >> YEAH, I KIND OF LOOK AT OIL
>> YEAH, I KIND OF LOOK AT OIL AS A CANARY IN THE COAL MINE AND
AS A CANARY IN THE COAL MINE AND THINKING PEOPLE ARE BEING
THINKING PEOPLE ARE BEING ENTIRELY TOO OPTIMISTIC WHAT
ENTIRELY TOO OPTIMISTIC WHAT COVID-19 IS GOING TO DO TO THE
COVID-19 IS GOING TO DO TO THE GLOBAL ECONOMY IN THE LONG TERM,
GLOBAL ECONOMY IN THE LONG TERM, NOT SHORT TERM.
NOT SHORT TERM. YOU CAN PROTEST ALL YOU WANT AND
YOU CAN PROTEST ALL YOU WANT AND SAY TO LIBERATE MINNESOTA, BUT
SAY TO LIBERATE MINNESOTA, BUT THE TRUTH IS NO MATTER WHAT YOU
THE TRUTH IS NO MATTER WHAT YOU TRY TO DO TO RESTART THE
TRY TO DO TO RESTART THE ECONOMY, NOBODY IS GOING TO A
ECONOMY, NOBODY IS GOING TO A RESTAURANT AS MUCH AS GOING TO
RESTAURANT AS MUCH AS GOING TO SEE A BASEBALL GAME OR A CONCERT
SEE A BASEBALL GAME OR A CONCERT OR A HUNDRED OTHER THINGS THAT
OR A HUNDRED OTHER THINGS THAT WOULD INDICATE A NORMAL GLOBAL
WOULD INDICATE A NORMAL GLOBAL ECONOMY GOING FORWARD.
ECONOMY GOING FORWARD. SO OIL MAY BE THE CANARY IN A
SO OIL MAY BE THE CANARY IN A COAL MINE.
COAL MINE. THERE MAY BE REPERCUSSIONS
THERE MAY BE REPERCUSSIONS THROUGH PLACES WE HAVEN’T EVEN
THROUGH PLACES WE HAVEN’T EVEN SEEN YET THAT WILL KEEP THE
SEEN YET THAT WILL KEEP THE ECONOMIES CRATERED, NOT JUST
ECONOMIES CRATERED, NOT JUST OIL.
OIL. FOR A LONG, LONG TIME UNTIL WE
FOR A LONG, LONG TIME UNTIL WE HAVE, YOU KNOW, A VACCINE AND
HAVE, YOU KNOW, A VACCINE AND THAT COULD BE A YEAR, A YEAR AND
THAT COULD BE A YEAR, A YEAR AND A HALF AWAY.
A HALF AWAY. I THINK THAT WHAT THIS IS
I THINK THAT WHAT THIS IS TELLING ME IS WE’RE FAR TOO
TELLING ME IS WE’RE FAR TOO OPTIMISTIC HOW THIS WILL PLAY
OPTIMISTIC HOW THIS WILL PLAY OUT ECONOMICALLY.
OUT ECONOMICALLY. I THINK OIL IS TELLING YOU A
I THINK OIL IS TELLING YOU A STORY HOW BAD THINGS ARE GOING
STORY HOW BAD THINGS ARE GOING TO GET GOING FORWARD.
TO GET GOING FORWARD. >> SO YOU THINK THE OIL MARKET
>> SO YOU THINK THE OIL MARKET MIGHT BE CORRECTLY PRICING IN
MIGHT BE CORRECTLY PRICING IN THE LEVEL OF FUTURE ECONOMIC
THE LEVEL OF FUTURE ECONOMIC ACTIVITY RIGHT NOW?
ACTIVITY RIGHT NOW? THE SIGNAL THERE IS A SIGNAL
THE SIGNAL THERE IS A SIGNAL HERE THAT’S OTHER THAN MARKET
HERE THAT’S OTHER THAN MARKET PANIC, WHICH AGAIN, SOMETIMES
PANIC, WHICH AGAIN, SOMETIMES MARKETS PANIC AND DON’T
MARKETS PANIC AND DON’T NECESSARILY SEND YOU SOME
NECESSARILY SEND YOU SOME INTELLIGENCE SIGNAL ABOUT THE
INTELLIGENCE SIGNAL ABOUT THE FUTURE BUT TO THE EXTENT WILL IS
FUTURE BUT TO THE EXTENT WILL IS AN INTELLIGENCE SIGNAL ABOUT THE
AN INTELLIGENCE SIGNAL ABOUT THE FUTURE, A FORWARD PREDICTIVE
FUTURE, A FORWARD PREDICTIVE PRICE HAPPENING HERE, IT’S THIS
PRICE HAPPENING HERE, IT’S THIS MARKET SAYING THIS IS GOING TO
MARKET SAYING THIS IS GOING TO BE A WHILE.
BE A WHILE. DEMAND IS GOING TO BE DOWN FOR
DEMAND IS GOING TO BE DOWN FOR AWHILE?
AWHILE? >> IT DID IT IN 2007.
>> IT DID IT IN 2007. OIL STARTED CRASHING WELL BEFORE
OIL STARTED CRASHING WELL BEFORE THE FINANCIAL CRISIS HIT IN
THE FINANCIAL CRISIS HIT IN 2008.
2008. I MEAN, IT HAS BEEN A KNOWN TO
I MEAN, IT HAS BEEN A KNOWN TO BE AN INDICATOR.
BE AN INDICATOR. THINK ABOUT AUTOMOBILES FOR
THINK ABOUT AUTOMOBILES FOR EXAMPLE, CHRIS.
EXAMPLE, CHRIS. IF YOU HAVE 20% UNEMPLOYMENT
IF YOU HAVE 20% UNEMPLOYMENT AND, YOU KNOW, AUTOMOBILES, YOU
AND, YOU KNOW, AUTOMOBILES, YOU KNOW, MILLIONS, 15, 20 MILLION
KNOW, MILLIONS, 15, 20 MILLION OF THEM ARE LEASES, HOW MANY OF
OF THEM ARE LEASES, HOW MANY OF THOSE LEASES WILL GET THROWN
THOSE LEASES WILL GET THROWN BACK AT THE BANKS AND WHAT WILL
BACK AT THE BANKS AND WHAT WILL THE BANKS DO WITH THESE CARS AND
THE BANKS DO WITH THESE CARS AND CARS PRICES ARE GOING TO CRATER
CARS PRICES ARE GOING TO CRATER AND NOBODY IS GOING TO BE ABLE
AND NOBODY IS GOING TO BE ABLE TO SELL A CAR.
TO SELL A CAR. NOBODY IN THIS COUNTRY WANTS TO
NOBODY IN THIS COUNTRY WANTS TO BUY A CAR.
BUY A CAR. THERE WILL BE TREMENDOUS
THERE WILL BE TREMENDOUS PRESSURE ON BANKS THAT HAVE ALL
PRESSURE ON BANKS THAT HAVE ALL OF THESE LOANS BASICALLY THEY
OF THESE LOANS BASICALLY THEY ARE GETTING BACK WITH CARS THAT
ARE GETTING BACK WITH CARS THAT HAVE VERY LITTLE VALUE.
HAVE VERY LITTLE VALUE. THEY ARE GOING TO SEE CARS GO
THEY ARE GOING TO SEE CARS GO DOWN THE WAY CRUDE DID CLOSER TO
DOWN THE WAY CRUDE DID CLOSER TO SEE
SEE ZERO.
ZERO. THIS REVERBERATES IN A THOUSAND
THIS REVERBERATES IN A THOUSAND DIFFERENT WAYS WHERE WE COULD
DIFFERENT WAYS WHERE WE COULD CALL ANY COMMODITY BEING A
CALL ANY COMMODITY BEING A VICTIM OF THIS VIRUS AND THE
VICTIM OF THIS VIRUS AND THE CRATERING GOING ON IN THE GLOBAL
CRATERING GOING ON IN THE GLOBAL ECONOMY.
ECONOMY. SO I JUST DON’T BELIEVE THAT
SO I JUST DON’T BELIEVE THAT WE’VE SEEN ANYWHERE NEAR THE
WE’VE SEEN ANYWHERE NEAR THE WORST OF ALL OF THIS AND I THINK
WORST OF ALL OF THIS AND I THINK OIL IS TELLING THAT STORY RIGHT
OIL IS TELLING THAT STORY RIGHT NOW.
