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Getting rude with crude
This is Not Pretty, Not Rich— a newsletter meant to keep you up to date on what’s happening in the markets and economy, and what you can do about it — if anything.
A reminder that I’m now sending this out on a Tuesday/Friday schedule for the time being. If any of you would like to see it more or less, let me know.
It’s Tuesday, April 21.
So is oil free or what?
Something very strange happened yesterday: The price of oil went negative. That is, as of market close on Monday afternoon, the price of a barrel of oil was negative $37.63.
This is obviously confusing, and it isn’t necessarily easy to understand what this means or to try and explain it without getting deep into the weeds. But let’s try and drill into it.
Crude oil is traded via futures contracts, meaning that entities purchase oil long before they actually take possession of it — the oil showing up on tankers right now was purchased months ago. Essentially, demand for oil has dropped substantially because people aren’t driving or traveling. But oil production and shipments haven’t stopped. So, because no one’s using the oil we have, it’s sitting in storage, and when more oil shows up, there’s nowhere to put it. As a result, contract holders need to sell the oil before they can take possession, meaning that they’re paying others to take it off their hands.
Thus, negative prices.
Yes, it’s weird, crazy, and completely unprecedented. But it’s also just so deliciously “2020,” isn’t it?
As for what it means? Well, I’m not going to try and pretend that I have a thorough understanding of it. But this Bloomberg story acts as a pretty good explainer, so I’d start there. You can read this, too, which can help flesh out the situation more.
Where we’re at with COVID-19
While oil prices were cratering, the death toll has continued to climb as the coronavirus pandemic has yet to peak. In fact, it might be worse than previously thought — a study from USC and the LA County Department of Public Health found that the outbreak could be 55 times larger than anticipated. The number of deaths in the U.S. is closing in on 40,000, too.
Meanwhile, there’s been a push to reopen businesses. You may have seen people blocking traffic and causing other types of problems during widespread protests over the past few days, too. These protests, which appear to be (at least possibly) coordinated with The White House and others, are trying to pressure state governors to “open up” their states.
While everyone wants everything to open up as soon as possible, it’s unclear what, exactly, these protests hope to accomplish. We don’t have the outbreak under control — in fact, we still don’t know how bad it is, because we haven’t ramped up testing almost anywhere.
Either way, it looks like some states are set to lower business restrictions in the coming weeks. Hopefully, everything is fine. But it’s a gamble, and it could lead to a second, larger wave of cases.
This New York Times story has some interesting graphs and charts, too, that show who is bearing the brunt of the pandemic.
How about some fun things now
I’m on week five of working from home, and it’s getting old. If you’re feeling antsy, too, I’ll leave you with a few recommendations to help pass the time. Here are some things I’ve been getting into as of late.
Disclaimer: I don’t know any of the people behind these projects, I just think they’re cool.
Watch The Sopranos and listen along with the new “Talking Sopranos” podcast, hosted by two actors from the show.
Watch The Wire and listen along with “Way Down in the Hole,” a new podcast from The Ringer. Like “Talking Sopranos,” the hosts rewatch the series one episode at a time, discuss what’s going on, and have stars from the show stop by, too.
Listen to “The Dave Chang Show.” Another podcast from a New York-based chef. I’m not all that into food-programming, but I really liked Anthony Bourdain, and Chang has a similar vibe. He also has a Netflix show, “Ugly Delicious,” that’s worth watching.
Subscribe to “The Crosstab,” a political newsletter by an editor (I believe) at The Economist. You can also check out “Endless Metrics,” a newsletter that digs into economic metrics — it’s a quick read, but will help you understand what’s going on.
If you have any suggestions, send them my way. Otherwise, that’s it for now. Good morning, and good luck.