[StarvingLion]

There is no ulterior motive amongst the Russians.

Look everyone, rockdoc is a Turnip Trucker.

[onlooker]

There is no ulterior motive amongst the Russians.

Look everyone, rockdoc is a Turnip Trucker.

[evilgenius]

If we have any short sellers here I suggest linking up to some social media with some oilfield folks. Get a roughneck facebook friend.

When the first drill ship that gets shut down and quarantined this will cause severe chaos and severe pain in the offshore drilling space. There you go. I can't say much more than that at this point but I think you'll see drilling companies that will be hurt in a major way..

Will there be a way to keep the incidence of the virus among offshore from coming to light? Can they keep the rigs going, even if everybody has it?

[sparky]

.
They can keep the crew working even if they all have the Corona shake ,
just big wads of money is the required treatment of any ailment in the oil patch

I read the situation as the Russians being sick and tired of propping up the price
while US frackers make no effort to limit their output
it sound like "you want free market ??.... have a shovel full of it "
I'm not so sure how this would play in real life since the US fracking industry doesn't really export on the world market
it would bring some investment into question , especially for offshore

[Cog]

Russia is a third world economic country heavily reliant on oil exports. What they do or don't do won't make a huge effect on global oil prices. They will only hurt themselves. Which is fine with me as dead Russians make me feel warm at night.

[sparky]

.
Last time I checked Russia is the only third world country which operate a space station

[StarvingLion]

Cog's a slogan and ideologue peddler. He's broke.

[evilgenius]

.
They can keep the crew working even if they all have the Corona shake ,
just big wads of money is the required treatment of any ailment in the oil patch

I read the situation as the Russians being sick and tired of propping up the price
while US frackers make no effort to limit their output
it sound like "you want free market ??.... have a shovel full of it "
I'm not so sure how this would play in real life since the US fracking industry doesn't really export on the world market
it would bring some investment into question , especially for offshore

Yeah, the situation sounds just like the economics of farming. If everybody knows what crops to grow for next season, they will. If they do, then nobody makes any money. Herd mentality, sort of. I say sort of because there is the wisdom of the crowd. On some investments you don't want to get caught outside of the norm. On others, it pays to be unique.

[sparky]

.
I've been thinking about this .....over-producing in a falling fast market
on the face of it it doesn't make sense
but it is a general phenomenon , so there must be some hard reasons behind it beside stupidity
my guesses is
- bills have to be paid ,
- producing less bring less money but the guy next door keep pumping out as much as he can
being righteous for others to profit from it is a mug game

It seems to me the Russian thinking is let the US get some pain ,
they have been riding high on a couple of production cuts

[kublikhan]

Saudi Arabia plans to increase oil output next month, going well above 10 million barrels a day, as the kingdom responds aggressively to the collapse of its OPEC+ alliance with Russia. The world’s largest oil exporter started a price war on Saturday by slashing the prices it sells crude into foreign markets by the most in at least 20 years, offering unprecedented discounts in Europe, the Far East and the U.S. to entice refiners to purchase Saudi crude at the expense of other suppliers.

At the same time, Saudi Arabia has privately told some market participants it could raise production much higher if needed, even going to a record of 12 million barrels a day. With demand being ravaged by the coronavirus outbreak, opening the taps like that would throw oil market into chaos.

Maximum Pain
The shock-and-awe Saudi strategy could be an attempt to impose maximum pain in the quickest possible way to Russia and other producers, in an effort to bring them back to the negotiating table, and then quickly reverse the production surge and start cutting output if a deal is achieved.

The production increase and deep discounts mark a dramatic escalation by Prince Abdulaziz bin Salman, the Saudi oil minister, after his Russian counterpart Alexander Novak rejected an ultimatum on Friday in Vienna at the OPEC+ meeting to join in a collective production cut. After the talks collapsed, Novak said countries were free to pump-at-will from the end of March. “Saudi Arabia is now really going into a full price war,” said Iman Nasseri, managing director for the Middle East at oil consultant FGE.

Record Discounts
With jet-fuel, gasoline and diesel consumption rapidly falling due to the economic impact of the coronavirus outbreak, the energy market now faces a simultaneous supply-and-demand shock.

Saudis Plan Big Oil Output Hike, Beginning All-Out Price War

Wonderful. As if the demand shock wasn't bad enough now it looks like we may have a supply shock as well.

[evilgenius]

Time for Trump to come along and ride horses with his pal Vlad.

Maybe Vlad golfs?

At the same time the man in charge in SA has just put three competitors to the crown under arrest. One of them was the former crown prince. The man in charge is the current crown prince. You can see how this sort of tactic, if true, could rile certain members of the royal family. Trump stuck by Bin Salman when he had Kashoggi assassinated. There was a lot of ridicule, which Trump hates. He took one for the crown. Trump may want low oil prices because they would directly appeal to his base in an election year. He doesn't seem to think about how his bowling pin sort of shoot from the hip strategy comes with pin action. He could come up with a way to take care of some of the overindebted frackers, so that they could ramp down on production. Then, Trump could actually offer Vlad something. You know, they pay farmers not to farm sometimes, too. When Trump gets overwhelmed he tweets stuff in the middle of the night. He may be staying up nights for a while.

[Outcast_Searcher]

If we have any short sellers here I suggest linking up to some social media with some oilfield folks. Get a roughneck facebook friend.

When the first drill ship that gets shut down and quarantined this will cause severe chaos and severe pain in the offshore drilling space. There you go. I can't say much more than that at this point but I think you'll see drilling companies that will be hurt in a major way..

Will there be a way to keep the incidence of the virus among offshore from coming to light? Can they keep the rigs going, even if everybody has it?

In the real world, even if "everybody gets it", it won't be at the same time. Even if they decide to shut down, say, ALL the rigs in Russia, that's not all the rigs in the world. And all the oil in storage globally isn't going away suddenly. And if things are REAL bad re COVID-19 for while, oil demand will PLUNGE during that outbreak anyway.

And it's like a nasty flue. Not an ELE for crissakes. So even if it kills off 2% of the global population or so, do you imagine that the other 98% will never want to consume oil again?

Just because many drilling companies MAY go BK, doesn't mean the oil will go away, the ability to extract it (when the price makes it profitable) goes away, etc. Inconvenience isn't global doom. Delay isn't global doom. Even death of a few percent of the global population isn't global doom.

Meanwhile, aside from spreading consipracy theories and ghost stories for fun and profit, we don't KNOW how the disease will progress. We don't KNOW when effective vaccines will be ready in meaningful quantity.

We do know fast crash doomers will continue to assume the worst. We can look at their track record.

[sparky]

.
......Soo , what will be the net result of crude oil priced at 20$
- the Aramco IPO turn into a turnip ,
- fracking is in a financial nuclear blast zone
- the majors oil companies slash their Research and exploration
- marginal improvement to existing oil fields come under severe review
- Cheap oil is good for the economy but if the economy got the flu that might not be enough
- some oil importing countries will breath a sight of relief at such an unexpected boon
- Saudi Arabia and other oil exporting countries will have to slash their spending , locals will not be impressed

feel free to add any you might think of

[onlooker]

Crude oil down almost 20% . Holy cow
https://www.theglobeandmail.com/investi ... ties/CL*0/

[onlooker]

Crude oil down almost 20% . Holy cow
https://www.theglobeandmail.com/investi ... ties/CL*0/

Correction Oil Drops 31% in Worst Loss Since Gulf War as Price Fight Erupts



https://www.bloomberg.com/news/articles ... -crude-war

[shortonoil]

......Soo , what will be the net result of crude oil priced at 20$

The net result is that now there isn't enough energy remaining to be extracted from a unit of oil to restart the process. The petroleum production process is close to its entropic limit at 84,488 BTU per gallon. The system's "dead state" is near at hand, and it can no longer rid itself of its waste heat. The production and consumption of oil and its products will never again be continually increasing. Oil, and the civilization it has built, and powered will begin to disappear.

[onlooker]

......Soo , what will be the net result of crude oil priced at 20$

The net result is that now there isn't enough energy remaining to be extracted from a unit of oil to restart the process. The petroleum production process is close to its entropic limit at 84,488 BTU per gallon. The system's "dead state" is near at hand, and it can no longer rid itself of its waste heat. The production and consumption of oil and its products will never again be continually increasing. Oil, and the civilization it has built, and powered will begin to disappear.

It should reach into the $20's today ?

[Pops]

.
......Soo , what will be the net result of crude oil priced at 20$

Supply will fall once enough hedges and contracts expire. But then it will fall too low and the price will go back up until it balances demand somewhere around breakeven.
Same as it ever was.

That stuff has been down there millions of years. And it burns just as hot as it did yesterday. It'll still be there in a month or year.

[Tanada]

.
......Soo , what will be the net result of crude oil priced at 20$

Supply will fall once enough hedges and contracts expire. But then it will fall too low and the price will go back up until it balances demand somewhere around breakeven.
Same as it ever was.

That stuff has been down there millions of years. And it burns just as hot as it did yesterday. It'll still be there in a month or year.

There you go again, trying to use facts and logic to dissuade the fast crash NOW crowd of true believers...

[rockdoc123]

The net result is that now there isn't enough energy remaining to be extracted from a unit of oil to restart the process. The petroleum production process is close to its entropic limit at 84,488 BTU per gallon. The system's "dead state" is near at hand, and it can no longer rid itself of its waste heat.

OK that qualifies as some serious stupid. If an oil well is shut in with the proper completion technology (eg: gas in the annulus etc) then it can easily be turned on without any problems. Most of the tight oil wells already have some sort of artificial lift (pcp or esp pump) and gas lift is readily available so pressure is not an issue. There is no calculation that a reservoir engineer would ever do based somehow on "energy", that is just completely stupid. The calculation is done is ...what is the cost to turn the well on and how soon is that paid out from production. The answer to that is almost invariably with stripper wells producing around 50 bbls/d the restart pays off in a week or so. There will be no problem bringing back on production IF and that is a big IF it is shutin. The actual operating costs on an unconventional well are pretty low (less than $10) so companies aren't going to shutin a well that is producing even if prices go to $20.

The only issue impacting the US oil and gas business is with lower oil prices the debt leverage comes more into play given the new price will be below full cycle replacement cost. Once the hedges and committed drills go away production will start to drop fairly quickly. Companies that are over leveraged will be subject to consolidation. Production will drop and eventually supply and demand will come back into line and prices will rise again.