Ann: Company Update, page-166

How's it work? ... Like toxic waste ... if you pull it up and you need to sell it right now (as in you don't have the ability to store it) you have to pay someone to take the waste away.

"Today’s price weakness is asymmetrically skewed to WTI and North American crudes relative to Brent and global linked barrels. The May’20 WTI contract expires at the end of trading tomorrow, undoubtedly marking the weakest contract expiry so far this century. The May’20 WTI contract is currently trading 55% lower today. This day of reckoning comes simply because the financial pricing has to converge to the physically traded commodity on contract expiry. In other words, the paper market and the price of the underlying commodity have to converge as physical barrels prepare to deliver. Today’s stark price move is a function of a weak physical market ravaged by the unprecedented degree of refinery run cuts. As refiners have been rejecting physical barrels, physical storage has been piling up. To be clear, this is a North American storage congestion story, not a global one where we estimate some 1.5 billion barrels remaining in onshore storage capacity."
Michael Tran RBC Capital
Mon, 20 Apr 2020 13:06:00 -0400