A shocking way to put historic oil price drop in perspective

Got a big swimming pool that’s empty and you don’t plan to use? Well, here’s a money-making idea that your town and neighbors will hate.

Fill it with crude oil.

Here’s how bizarre the oil market was on Monday.

The price of a barrel of crude oil declined to a negative $38. NEGATIVE $38! That was a better than 300 percent decline for the day.

That means, for every one barrel of oil investors owned, they not only lost their initial investment, but also another $38.

Now, you have to understand: That price is on a barrel of oil in the May futures contract that expires today Tuesday. And the way this works, the holder must either sell the contract or take possession of actual barrels of oil at expiration.

Because of the dreadful economy these days, nobody anywhere in the world is using a lot of oil and gasoline. Normally, oil would be in demand this time of year because gasoline use goes up and that makes oil more valuable.
Not this year.

So that extra unneeded oil and gas is now sitting in tanks on land or tanker ships at sea. And there is little or no room to store more oil. With no place to put the stuff, the last thing anyone who owns those futures contracts wants is to have to take possession of more oil.

That’s where your pool comes in.

Technically – and I’m not seriously suggesting this – one of those hard luck investors could give you $35 to dump every barrel of his oil into your pool. And to put it into perspective, there are 1,000 gallons of oil associated with each futures contract.

So, one contract alone could earn you $35,000 if you are willing to give up swimming for the summer. (Seriously, you would probably also need a new pool next year. But this is only fantasy, so humor me.)

You are going to see stories about how oil became worth less than nothing on Monday. That really isn’t true; it was the May futures contract that did that.

The June futures contract was still trading at more than $20 a barrel, at least until investors wake up and start worrying about oil all over again next month.

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