Finance twitter: I have a question about negative oil prices. What happens if you hold oil contracts and then just refuse to take delivery? I am trying to understand why anyone sold when oil prices became negative. What are the consequences of not picking up your oil delivery?
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Replying to @Pinboard
One thing trading exchanges like is customers that don't comply with the terms and definitely wouldn't ever restrict you from ever using their exchanges while also taking you to court for breach of contract
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Replying to @HarperMitchell @Pinboard
Because what you are trading at the end of the day is contracts
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Replying to @HarperMitchell @Pinboard
See section three here: "Is it more efficient to breach the contract than comply with it?"https://www.nortonrosefulbright.com/en/knowledge/publications/8c4a71b8/oil-price-volatility-10-points-to-consider-when-facing-termination-or-renegotiation-of-a-contract#section4 …
1 reply 1 retweet 15 likes -
Replying to @HarperMitchell
Thank you, this is exactly what I was looking for!
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Replying to @Pinboard
See also section 8 on "take or pay clauses" I'm not well-versed in WTI or NYMEX or Brent contracts and I don't know if those clauses exist
2 replies 0 retweets 3 likes -
Replying to @HarperMitchell @Pinboard
@tracyalloway@JavierBlas could likely answer in greater detail for specific markets2 replies 0 retweets 1 like -
Replying to @HarperMitchell @Pinboard
If you don’t take delivery you would be declared in default. The money is the least problem: you may barred from the exchange (and other exchanges sharing the same clearing house) for a very long period.
1 reply 1 retweet 4 likes
Got it. Thanks for helping me understand this!
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