GET PAID TO INVEST IN OIL | Infinite Money Explained

What's up you guys? It's Crime here! So, I think we just unlocked the brand-new infinite money glitch because, as of yesterday, April 20th, the price of oil futures went negative. Which means it dropped below zero dollars! That's right, below zero dollars! As in, they will now pay you to take delivery of oil, and that's never happened before in history. And this is for real - this is not some Robin Hood infinite money loophole that's gonna be fixed by a software developer whenever he stops posting about a spy or puts on Reddit's Wall Street Bets.

These negative oil prices are serious, and oil companies are now paying people just to take delivery of their excess product. So, in a remarkable, maybe once-in-a-lifetime event that stole the front page of pretty much every major news outlet in existence yesterday, let's cover exactly what's going on: how on earth this could have happened, how oil prices went negative, how you can make money from this, and whether or not these headlines are blowing this out of proportion. Again, which I'll just be real with you guys: yes, they're blowing it out of proportion yet again.

And we're gonna be going over all of the juicy details you guys want to know as soon as you submit—no wait, as soon as you obliterate the like button! I realize that pretty much everyone is saying that now, but we got to show them that these like button smashers on this channel are the most powerful of all of them! So, we have to do our part to destroy it. Obliterate it! Obliterate the like button! Plus tomorrow is my birthday, so as an early birthday present from me, if you wouldn't mind doing that, it would be greatly appreciated!

So of course, with that said, here's what you came here for. Oops, I hit that accidentally! There we go. First of all, here are the headlines that we're all seeing:

• Oil prices plunge below zero dollars.
• Oil prices turn negative.
• Oil prices dip below zero as producers forced to pay to dispose of excess oil.
• Crash is 305 percent.

And the most shocking of all of them is this one: ninety percent of viewers of Still Mods smash his like button. Okay, that last one was photoshopped—guilty! But in all seriousness, headlines like this start making us think, "Wow, so the price of oil is now negative money, so that must mean it's gonna be free to fill up at the gas tank, right?"

We know, know even better! I'm gonna get paid to put gas in my Hummer H1! Mm-hmm, that's gonna be perfect! Well, not exactly because, like I mentioned earlier, that headline is slightly misleading. And even though oil prices did crash 305 percent, it doesn't tell you the entire story, and it doesn't exactly mean you're gonna get paid to invest in oil.

Here's the issue: right now, with the economy shut down, we're not using as much oil anymore. We're not driving around as much, if at all. We're not traveling, we're not going on airplanes, and we're certainly not going on cruises. Businesses and manufacturing have slowed down to almost nothing. And while all of that is going on, the demand for oil has plummeted. It's really just a matter of supply and demand, and right now there's a lot more supply than there is demand.

However, that's just the tip of the iceberg because even though demand has slowed down, production has continued forward as usual, even though we're using less of it. That's created a surplus of oil that needs to go somewhere, and that's where the problem comes up. Now, typically, you would think that the solution to this would be to stop producing as much oil, right? Well, yes, that would be the ideal solution, but actually doing that is insanely complicated.

That's because right now, during all of this, we have a good old-fashioned schoolyard standoff between different nations who all want to duel it out to try to be the main supplier of oil. And they've declared a good old competition as to who could stay in business the longest without going bankrupt.

So, I'm gonna sum things up and clarify things in a way that will make sense to everybody. So, if you feel like I'm simplifying this a little bit too much, just let it slide, because this is roughly what's happening. Basically, Saudi Arabia can produce oil for just under $10 a barrel. Russia makes it for about $20. The United States ranges anywhere from $21 to $25, Canada around $27, and it goes all the way up from there. And the majority of the world's oil is currently being produced by these three nations, but the United States has slowly been catching up.

Now, I feel like this is the point where we should all be gathering around a campfire at night, Graham tells a spooky story to everyone, but I guess this is gonna do on YouTube. This all began in 2016 when oil prices plummeted because the United States began ramping up its production, causing more supply to hit the market.

Now, lower oil prices don't really matter that much to a place like Saudi Arabia because as long as it's selling for more than $10 a barrel, they make money. But that's not a good thing for the United States oil companies, who need oil prices to be above $20 to even turn a profit. And once prices drop below that amount, they start losing money on everything that they make.

Well, once the announcement came that Russia and Saudi Arabia would not be cutting back on their oil production amid this whole illness, oil prices plummeted. And they said on top of everything, "You know what? We're gonna be ramping up production! We're gonna start producing even more oil!" It's basically like them saying, "We're gonna run you out of business!" And even though it's gonna hurt us in the short term, we're gonna benefit long-term because after this is all over, we're gonna have a lot less competition.

And that's what's happening now with negative oil prices. Now, when you hear negative oil prices, it doesn't actually mean you're gonna get paid $30 just to take delivery of a barrel of oil, except it kind of does within this context. See, when you hear the term negative oil prices, it's referring to what's known as the oil futures, or more specifically, the oil futures of one supplier in particular known as West Texas crude.

Now, anytime I mention oil futures, it's basically just an agreement that says, "I'm gonna be paying this particular price on this day, and on that day, I'm going to take delivery of the product and follow through with the agreement." In this case, people bought oil futures at a higher price, expecting things not to get so bad.

And as the price of oil fell, it became apparent that those future prices became less and less valuable, so much so that they literally ran out of space to hold all of the excess oil. It's literally cheaper right now for people who bought oil futures to pay you to take it off of their hands than it is for them to take delivery of it and then have to figure out where to put it.

Like imagine you're selling koi fish. If there's a constant supply of buyers, you could sell your fish for a decent amount of money. But what happens if the demand for koi fish goes down, but your fish just keep breeding and then you have no place to put them? Well, at that point, you pretty much just have to give them away for free.

But then what happens if you can't give them away and no one is taking koi fish, but your fish keep breeding, and now it's gonna cost you even more money to figure out where to store them? Well, at that point, you have to pay people to take these fish off your hands. And that's basically what's happening with oil. They've run out of space to put their oil, so it's cheaper for them to pay you to figure it out than it is for them to find a storage solution.

Because they're out of storage on very short demand, with future contracts that expire today, on April 21st, the price of oil went negative just as an effort to get people to take it from them. Unfortunately, storing oil is not something that like you and I can do in our spare time. It's not as though you could go and drain your pool, fill it up with a whole bunch of oil, and then get paid $40,000 a contract, although that would be pretty cool!

Instead, storage could be rather costly—with this giant oil tanker, which would store two million barrels for the bargain price of $335,000 per day. So, no, it's not like the average Joe could just show up at the refinery today, take delivery of a thousand barrels of oil, get paid $40,000, and then put that oil on like a fifty-acre property somewhere until the prices go up. It doesn't work like that, unfortunately. Sorry to be the bearer of bad news!

Anyway, when you see negative oil prices, it's only referring to the contracts in May for one particular supplier that expire on April 21st. And for future months, since now you have some time to figure out where to store all of this excess oil, prices are trading at more reasonable levels. They're not negative right now, although the reason why oil sold in futures like this is actually really interesting.

And here's how that works. In terms of our koi fish example, let's say you're a koi fish breeder and you know you're gonna have a hundred koi fish for sale at the end of the year, but you don't know what the current market price of those fish are gonna be by the time they're actually born. So, you could go and sell the rights to someone else to buy the koi fish at a future price, where basically they say, "I'm gonna pay you upfront twenty dollars a fish, and I'm going to take delivery of those fish in December."

Well, if the price of the koi fish goes down by December, well that works out in your favor because you sold half of your fish upfront for a higher price, and then you could sell the remainder of those fish at market value. But if the price of koi fish ends up going up by December, well at least you locked in a rate upfront for half of your stock. The person who paid $20 can now resell them for a profit, and you have half of your excess inventory that you could sell at market value.

And that's exactly how oil works as well. But why then the sudden drop in prices? Well, that's because this particular refinery needs people to come and pick up their oil today, on April 21st, and because there's a lack of storage, people would rather just pay someone else to deal with it than they would take delivery and then figure out like, "Wait a second, where do I store all of this oil that I agreed to buy?"

Now, as for whether or not this is gonna save you money when you go and fill up at the gas tank, the answer is kind of a yes and no. Yes, lower oil prices do mean that your gas becomes cheaper, but the price of gas that you pay is made up of several different factors as well, such as distribution, refining, taxes, and then the cost of oil itself. So all in all, you're still gonna have to pay to put gas in your car.

It's not going to be free, and no, you're not gonna get paid to do it! Although, like I said, it's most likely now going to be a little bit cheaper than it was before. As far as what this means for you and I, if this keeps going for much longer, some U.S.-based oil and gas producing facilities could end up going out of business, shifting our reliance to foreign oil production.

And once prices go back up, eventually, we're gonna end up paying more money for gas because now there are going to be fewer companies producing oil. And we have no idea how severe this is going to be or how low oil prices will have to go for this to happen. Eventually, some companies just can't run a deficit forever and will have to shut down, although we don't exactly know when this breaking point is going to be.

But if you want to make money from this, then most likely you're either going to be investing in or shorting oil and gas companies. And I'll be honest, when it comes to this, I have no idea what's going to happen, and I'm not investing in any of this myself. I'm more interested in the broad implications for the entire market than I am with this about trying to make a quick profit.

But hopefully, this explains the situation, and then from here, you can make your own decision as to what you want to do with it. And who knows? Maybe the Fed is going to start buying oil contracts too, with all of that excess money coming from the imaginary money printer!

So with that said, you guys, thank you so much for watching! I really appreciate it. As always, if you have not already, smash the like button! Make sure to smash the like button, subscribe button, notification bell. Feel free to add me on Instagram! I post here pretty much daily, so if you want to be a part of it, there, feel free to add me there as well! My second channel, The Graham Stephan Show, I post there every single day I'm not posting here. So if you want to see a brand new video from me every single day, make sure to add yourself to that!

And lastly, if you guys want free stocks, use the link down below in the description. WeBull is going to be giving you two free stocks when you sign up on their platform, and $2,100, with one of those stocks being valued up from $1,400! So if you want the two free stocks, it takes only a few minutes, feel free to use that link down below. Thank you so much for watching, and until next time!