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Sabah Newspaper Author Dr. Kerem Alkin commented on the reasons for the drop in oil prices to Sabah.com.tr.
WHAT DOES THE NEGATIVE PRICE MEAN IN OIL CONTRACTS?
FIRST TERM CONTRACT PROCEDURE FOR PETROL DONE IN 1982
The history of commodity exchanges, especially oil, agriculture, and food products, is a very old one. The oldest stock exchange in the world is located in the ancient city of Aizanoi, in Kütahya Çavdarhisar. It has a history of 1750 years. The world’s best-known commodity market, the Chicago Commodity Exchange, was founded in 1848. The New York Commodity Exchange, another major commodity exchange in the world, was founded in 1882. A century after its founding, the first crude oil futures contract was made on the New York Stock Exchange in 1982.
Kerem Alkin: “The history of crude oil will end in 2030” | video
SPECULATION IN CONTRACTS OF BASIC PRODUCTS
Initially, the primary objective of the commodity marketing contracts, which were made on a daily and daily basis, was the purchase, sale, and delivery of the products in question, be it orange, wheat, copper, or gold concentrate, or crude oil. barrel. . However, towards the end of the 1990s, global financial market professionals and speculators discovered the field of commodity contracts and began speculating on commodities, i.e. futures and futures contracts on commodities, as if they weren’t speculating enough.
98 PERCENT OF TERM OIL CONTRACTS FOR SPECULATION PURPOSE
The interest of professionals from international financial institutions and world speculators in oil futures contracts has been so out of control that in recent years, 98 percent of investors buying futures contracts to speculate; only 2 percent of them were converted into futures contract transactions for the physical buying and selling of real crude oil.
WHAT ARE THE INTERNATIONAL FINANCIAL INSTITUTIONS AND SPECULATORS THAT MAKE CONTRACTS IN YOUR HAND?
Upon expiration, new monthly, monthly, 3-month and 6-month contracts were entering in the following period. So, they traveled from a contract to another term. However, this time things did not work as they wanted. The global coronavirus outbreak caused such a contraction in world production and demand that crude oil prices collapsed. When oil prices fell below $ 30, countries like the Organization of Petroleum Exporters OPEC and Russia, which are not members of OPEC, agreed to cut daily oil production by 10 million barrels after lengthy discussions.
However, this decision did not stop the collapse of international oil prices, and the price of brent oil fell below $ 20 and the price of US oil. USA Texas Texas fell below $ 10, while oil contract prices for May held by international financial institutions and global speculators were in the $ 20/30 band. In this case, taking on millions of barrels of oil would remain ahead of world financial institutions and global speculators, as no one would aspire to these futures contracts. However, since the investment group did not actually trade in oil, how would they receive so much oil? Where would they keep?
THE REASON FOR OIL PRICES TO DECREASE NEGATIVE …
Realizing that this is not possible, international financial institutions and global speculators began to physically take oil and get into trouble, at the cost of writing serious losses on these contracts, and they started selling millions of contracts like crazy, and when Such outstanding futures contracts were sold. For the first time in the history of oil on the stock exchange, the price fell to negative. He even saw $ -54.
How long will the drop in oil prices last? | video
A few weeks later, in the world oil market, a historical negative price table will disappear when spot conditions under current conditions, that is, prices in the daily trading market, are reviewed in June and the next expiration. However, from now on, oil prices in the daily market will be around $ 20 or even below $ 20, China, Japan, South Korea and oil importing countries such as Turkey, which is very low import bills were followed widely benefited from oil prices will be in decline. Recovering oil prices seems difficult until concerns about the coronavirus outbreak have subsided.
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