April 24, Michael Davis, economics professor in the Cox School of Business at SMU Dallas, for a commentary that decoded a wild week of trading in the futures markets of the Texas oil industry. Published in the Dallas Business Journal: http://bizj.us/1q3k6f
The bizarre news on April 20 that oil was selling for negative $30 per barrel means exactly what you think it means: the pandemic is taking our economy into a strange and dark new place. This has never happened before.
But the news also means something else: so far at least, some of our most important financial institutions have shown they can deal with the madness. The fact that markets drove oil prices negative is actually a good reaction to a bad situation. If that hadn’t happened, we’d be in much worse shape than now. . .
Continue reading “Without the gamble of futures markets, the oil industry might be ready to fold”