[sparky]

.
A factor hanging like the ghost at the feast is the crashing of research and exploration budget
it seems like this will take a lot more time to get back on the horse

[vtsnowedin]

WTI up to $32.69 now on good news about one vaccine candidate and states reopening or at least starting to. June contract closes tomorrow but no repeat of last months negative prices are expected.

[C8]

C'mon oil, keep going up!! I know you can do it!

[sparky]

.
in the horse race of life bet on self interest , it's not the best looking horse
but it's always trying hard
in the horse race of energy , bet on oil , it's not the best looking horse
but it's the one with the best range

[Tanada]

.
in the horse race of life bet on self interest , it's not the best looking horse
but it's always trying hard
in the horse race of energy , bet on oil , it's not the best looking horse
but it's the one with the best range

Never appeal to a man's 'better nature.' He may not have one. Invoking his self-interest gives you more leverage.

[tita]

I have a question for something I don't understand. We know that WTI futures prices are for contracts for the next month. Also, the oil prices in the pysical market reflect the prices of the financial market, but it has its own dynamic.

So, when the price fell in March, it was for oil contracts of April. Does that mean that the physical market was impacted already in March, or was it only in April that producers started to feel the impact?

Of course, I know that producers use hedge and financial tools to protect themselves from variation of oil prices. But such plunge of oil prices in such a short period of time is uncommon...

[rockdoc123]

the main issue was those who had secured future contracts were faced with having to take delivery (which they aren't set up to do) and hence a wild frenzy to sell the physical oil at any cost. With no where to store it the traders ended up having to take a major loss to make sure they weren't stuck with oil they didn't want.

[tita]

the main issue was those who had secured future contracts were faced with having to take delivery (which they aren't set up to do) and hence a wild frenzy to sell the physical oil at any cost. With no where to store it the traders ended up having to take a major loss to make sure they weren't stuck with oil they didn't want.

Yes, this I understood. And it affected a low volume of oil BTW, and it was oil contracts for May. Last eia weekly report show stocks at their records, and I expect it will ease afterwards.

But even before this negative day, the oil plunge in March was uncommon. A 50% plunge usually happens in a few months, not a few days.

My question was more about the impact of low oil prices on operators in the first quarter. Obviously, it will be worse for the second quarter. But was it already bad in March for them? Were physical markets affected in March? I don't think so, but I'm not sure.

[Outcast_Searcher]

.
A factor hanging like the ghost at the feast is the crashing of research and exploration budget
it seems like this will take a lot more time to get back on the horse

Just like ramping up production, when the supply demand and production picture justify it, such resources and money for oil will return. Because, once they do, the price picture will be clear, and the profit motive will be back in force. Same as it ever was.

[ROCKMAN]

Outcast - Of course prices recover...just as they are now. Just as they did from the low of $17.54 in Nov 1998. And after the 3 price crashes since then...not including the current crash. And it matter if we've passed PO. There will always demand driven prices...even when demand drops to 50 million bbls/day.

[sparky]

There will always be a demand for hydrocarbon products ,
for some usage there is no substitutes
even should extraction fall too low , there will be some synthetic production

the real issue is the dynamic between demand and supply ,
when supply overtake demand there is a price crash ,
it's brutal because it is an easy prey to a massive speculation

when demand exceed supply , the price increase stimulate supply .....by any means ....by any source
it's not so violent because the time phase is longer

the most recent iteration of this balance system has been made somewhat faster because fracking is a fast ( and loose ) extraction industry
also it occur in the US , the blessed land of unrestricted speculators , with no production policy to act as shock absorber

[JuanP]

"US producers set to torpedo OPEC+ oil rally"
https://asiatimes.com/2020/06/us-produc ... oil-rally/

[REAL Green]

"US producers set to torpedo OPEC+ oil rally"
https://asiatimes.com/2020/06/us-produc ... oil-rally/

Juan, do you have any content from that naked link showing you have reading compehension of the subject matter?

[sparky]

.
Finally !!
it should be obvious to interested onlooker than the Cushing based West Texas intermediate price index is a joke
It being a bit of a virtual oil grade ,
Cushing being dependent on non producing factor
the US having stopped being an importer of crude
and the index having been the plaything of anyone having a computer and a few thousand dollar to loose

it got so bad that the financial press now quote the Brent index as the world reference

but the US oilmen are practical men and there is an oncoming light
Platts , the most respected oil industry info source is launching it's own index

https://www.spglobal.com/platts/en/abou ... _plattsags

[tita]

It's quite impressive to see the oil price so steady in the last two months, after the huge volatility before. Price is anyway creeping higher...

I think that spectulators are expecting a break on the upside. But things are not that simple IMHO... The increase of oil stocks was incredible globally, and it still has a long way to get back to pre-covid levels. SPR is decreasing again BTW, which pushes price down. And while the demand is higher than the supply (which would normally push prices higher), both are still so depressed from their pre-covid levels that any strong price increase could quickly change the balance with producers increasing their output.

So, oil price is kinda stuck at current level... And unless a major share of production capacity is lost, price won't go up that fast. But speculation can also do some weird stuff, we saw that in the end of April.

[sparky]

.
That's what made the WTI useless , the ratio of speculative trading to real industry operators was 50/1
the shanghai trading is tightly controlled ,to operate there ,one need a government license ,
which is withdraw if there is bad behavior ( like not paying taxes )

[REAL Green]

"Gulf Of Mexico Drillers Shut In More Than 82% Of Oil Production"

https://oilprice.com/Energy/Energy-Gene ... ction.html

"Map"
https://www.zerohedge.com/s3/files/inli ... k=3YIIRGFa

[vtsnowedin]

"Gulf Of Mexico Drillers Shut In More Than 82% Of Oil Production"

https://oilprice.com/Energy/Energy-Gene ... ction.html

"Map"
https://www.zerohedge.com/s3/files/inli ... k=3YIIRGFa

Storm related and routine in the Gulf. It will make zero difference a month from now.

[sparky]

.
A hurricane in the gulf ...how unusual !!

[asg70]

the ratio of speculative trading to real industry operators was 50/1

Funny how reluctant peakers were to acknowledge speculators back in the runup of 2008, though... Speculation or really any accusation of financial manipulation is the convenient excuse when prices aren't where one expected or hoped them to be.