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DoubleLine Podcasts

S8 E9 Talking WTI Crude Oil and Other Financial Market Mysteries ft. Jeff Mayberry

For these extraordinary times, The Sherman Show has been producing weekly reviews of the financial markets, macroeconomic data, fiscal actions by the U.S. government and monetary actions by the Federal Reserve. In this episode, recorded the morning of April 22, 2020, hosts Jeffrey Sherman and Samuel Lau and guest Jeff Mayberry also discuss in depth the causes and lessons of the unprecedented April 20 negative price settlement for the May contract on West Texas Intermediate crude oil at $37 per barrel (after marking an intraday low of -$40). They also try to clear up misinformation about the causes of the negative pricing, particularly in social media where some critics have wrongly blamed the market dislocation “financialization” of commodities trading by exchange-traded funds and exchange-traded notes. The true cause, Mr. Lau argues, was the confluence of a supply glut, perhaps years in the making, demand destruction by the economic shutdowns ordered by governments in response to the COVID-19 pandemic and lack of access to oil storage facilities for buyers of May contracts to take physical delivery of oil. If those conditions remain in place by the time of future expiry dates, Mr. Lau suggests, WTI contracts could settle at negative prices again.  “Will the buyers, the people who actually go long into the expiry and take delivery, are they going to continue to demand the negative price?” he asks. “I think it’s very possible if we still have … the surplus tied to storage concerns.”

Guest Speaker Bio

The views and opinions expressed herein are as of the date recorded and should not be construed as an offer to buy or sell any securities. Such views/opinions may differ from those of DoubleLine Capital or other of its affiliates and are subject to change without notice. DoubleLine has no obligation to provide any updates or changes. The following audio presentations represent DoubleLine’s intellectual property. No portion of these presentations may be published, reproduced, transmitted or rebroadcast in any media in any form without the express written permission of DoubleLine. DoubleLine has no obligation to provide any updates or changes. To receive permission from DoubleLine please contact info@doubleline.com.

Neither DoubleLine nor any of its affiliates makes any representation or warranty as to the accuracy or completeness of the statements or any information contained in this podcast and any liability therefore (including in respect of direct, indirect or consequential loss or damage) is expressly disclaimed.

DoubleLine is not providing any financial, economic, legal, accounting or tax advice in these podcasts. The receipt of these podcasts by any listener is not to be taken as constituting the giving of investment advice by any DoubleLine entity or individual to that listener, nor to constitute such person a client of any DoubleLine entity. The portfolio risk management process includes an effort to monitor and manage risk, but does not imply low risk.

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