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THE Price of Crude pt 14

General discussions of the systemic, societal and civilisational effects of depletion.

Re: THE Price of Crude pt 14

Unread postby rockdoc123 » Sun 12 Apr 2020, 20:45:21

It may very well be the US peak if the price of oil doesn't go higher pretty darn soon.


it's been said many times..the solution for low oil prices is....low oil prices. We saw this numerous times before and there is no reason to believe this time is different.
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Re: THE Price of Crude pt 14

Unread postby JuanP » Mon 13 Apr 2020, 04:43:07

"Oil climbs 4% as OPEC+ agrees record output cut"
https://www.rt.com/business/485633-oil- ... tion-cuts/

Well, we have the first answer to the question of how much prices would rise after the world's biggest oil production cuts ever: A whole $1 to $2! LOL! Welcome to the brave new COVID-19 world!

This past days we reached a few COVID-19 milestones. The world reached and passed 100,000 deaths. The USA has more than half a million people confirmed infected and more than 20,000 deaths. The world will pass 2 million confirmed cases in a couple of days, too. Meanwhile, in Spain they lifted the lockdown for some nonessential workers while the epidemic is still going strong and likely to get much worse as a consequence. I expect lockdowns and stay at home orders to continue getting cancelled throughout the world in the coming weeks and months as economies crash and humanity gets resigned to the fact that this virus is not going anywhere and life needs to go on regardless. Let the chips fall where they may.
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Re: THE Price of Crude pt 14

Unread postby Drake88 » Mon 13 Apr 2020, 10:02:26

JuanP wrote:"Oil climbs 4% as OPEC+ agrees record output cut"
https://www.rt.com/business/485633-oil- ... tion-cuts/

Well, we have the first answer to the question of how much prices would rise after the world's biggest oil production cuts ever: A whole $1 to $2! LOL! Welcome to the brave new COVID-19 world!

This past days we reached a few COVID-19 milestones. The world reached and passed 100,000 deaths. The USA has more than half a million people confirmed infected and more than 20,000 deaths. The world will pass 2 million confirmed cases in a couple of days, too. Meanwhile, in Spain they lifted the lockdown for some nonessential workers while the epidemic is still going strong and likely to get much worse as a consequence. I expect lockdowns and stay at home orders to continue getting cancelled throughout the world in the coming weeks and months as economies crash and humanity gets resigned to the fact that this virus is not going anywhere and life needs to go on regardless. Let the chips fall where they may.


Hi, I agree with you. People are not doing what they need!
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Re: THE Price of Crude pt 14

Unread postby Outcast_Searcher » Tue 14 Apr 2020, 02:20:10

rockdoc123 wrote:
It may very well be the US peak if the price of oil doesn't go higher pretty darn soon.


it's been said many times..the solution for low oil prices is....low oil prices. We saw this numerous times before and there is no reason to believe this time is different.

+1
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: THE Price of Crude pt 14

Unread postby Outcast_Searcher » Tue 14 Apr 2020, 02:26:00

sparky wrote:.
It's not enough just now , or rather to the 1st of May when it kick in
it all depend on the re-starting of the world economy ,after 2 months , the cut drop to 8 millions barrels /d until the end of the year , then 6 millions for the 4 first months of 2021 .
that doesn't seems to be enough but let's be realistic , that about the most which could be agreed

A big question mark is the US production , but economics alone should see the cut implemented de facto if not de jure

Yes, big picture, cutting roughly 10 million BBLs a day seems to be roughly a compromise on dealing with the impact of, round numbers, the loss of 20ish million BBLs a day of global consumption I've seen bandied about.

And clearly the decline in the cut amount implies the expectation is economic growth will be picking up over time, even well before viable vaccine(s) are available in huge quantities.

If that assumption turns out to be wrong, they COULD adjust the dates -- but whether they WOULD get enough cooperation to do that (given that the implication is the global economy is much worse than hoped) is highly questionable.
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: THE Price of Crude pt 14

Unread postby sparky » Tue 14 Apr 2020, 03:28:53

.
Yep ....time will tell ,a good marker is world consumption number after new year
I suspect 6 millions is not going to be enough , not only has the flow through to increase but there must be more to drop the refineries input and product storage to the 70% normal
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Re: THE Price of Crude pt 14

Unread postby GoghGoner » Wed 15 Apr 2020, 07:43:05

WTI prices are back under $20 today. It bounced back from $19 a couple of weeks ago, I am not sure there will be any support at $19 this time...
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Re: THE Price of Crude pt 14

Unread postby GoghGoner » Wed 15 Apr 2020, 15:41:37

Well, this was the biggest crude build in the history of the EIA weekly report. 3 weeks to fill storage and then a couple of more to fill SPR. They better starting shutting down much faster than they are.
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Re: THE Price of Crude pt 14

Unread postby vtsnowedin » Wed 15 Apr 2020, 19:08:40

I believe I put this idea forward here about a week ago. Always the master of the painfully obvious.
https://finance.yahoo.com/news/u-weighs ... 07108.html
Bloomberg) -- The Trump administration is considering paying U.S. oil producers to leave crude in the ground to help alleviate a glut that has caused prices to plummet and pushed some drillers into bankruptcy.

The Energy Department has drafted a plan to compensate companies for sitting on as much as 365 million barrels worth of oil reserves by effectively making that untapped crude part of the U.S. government’s emergency stockpile, said senior administration officials, who asked not to be identified describing deliberations prior to a decision and announcement.
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Re: THE Price of Crude pt 14

Unread postby sparky » Wed 15 Apr 2020, 20:28:52

.
a bit of history on Texas oil industry and the depletion allowance circa 1913
.......... it got everything , oil ,money , power , the railroad commission and guns
from
https://spartacus-educational.com/JFKoildepletion.htm

"The most prolific oil reserves in the United States was not discovered until October, 1930. The East Texas Oilfield included Rusk, Upshur, Gregg and Smith counties. The first small company to find oil in East Texas was Deep Rock Oil Company. The first investor to take advantage of the discovery was Haroldson L. Hunt. He bought 5,000 acres of leases and an eighty-acre tract for $1,335,000. Hunt soon owned 500 wells in East Texas.

The discovery of oil in Texas made a small group of men a great deal of money. They decided to join together in order to maintain their profits. This included strategies for keeping the price of oil as high as possible. The rich East Texas field caused problems as it initially caused the price of oil to fall.

Ross Sterling, the former owner of Humble Oil, was elected governor of Texas and took office on 20th January, 1931. The Texas Railroad Commission, under the control of the large oil producers, attempted to limit the production of oil (prorationing) in the new fields of East Texas. On 31st July, 1931, the federal court in Houston sided with a group of independent oil producers and ruled that the Texas Railroad Commission had no right to impose prorationing.

Large oil companies in Texas such as Humble Oil were in favour of prorationing and Sterling came under great pressure to intervene. On 16th August, 1931, Sterling declared martial law in Rusk, Upshur, Gregg and Smith counties. In his proclamation Sterling declared that the independent oil producers in these counties were "in a state of insurrection" and that the "reckless and illegal exploitation of (oil) must be stopped until such time as the said resources may be properly conserved and developed under the protection of the civil authorities".

Sterling now ordered the commander of the Texas National Guard, Jacob F. Wolters, to "without delay shut down each and every producing crude oil well and/or producing well of natural gas". Wolters who was the chief lobbyist of several major oil companies in Texas, readily agreed to this action. Wolters used more than a thousand troops to make sure that the oil wells in East Texas ceased production. The Texas Railroad Commission was now in firm control of the world's most prolific oil fields. It now controlled the supply of the oil in the United States. As a result, the price of oil began to increase. The courts ruled that Sterling had exceeded his authority by the declaration of martial law and he was easily defeated by Miriam A. Ferguson when he attempted to be elected for a second term as governor.

When Franklin D. Roosevelt gained power he attempted to push a bill through Congress that would give his Secretary of the Interior, Harold Ickes, the authority to regulate domestic oil production. However, Sam Rayburn, a politician from Texas, as chairman of the House Committee on Interstate and Foreign Commerce, was able to kill the bill. It was left to another powerful Texan, Tom Connally, to sponsor the Connally Hot Oil Act. This gave the Texas Railroad Commission the authority to proration oil.

Texas oil millionaires also fought hard to maintain its tax concessions. The most important of these was the oil depletion allowance. It was first introduced in 1913 and allowed producers to use the depletion allowed to deduct just 5 per cent of their income and the deduction was limited to the original cost of their property. However, in 1926 the depletion allowance was increased to 27.5 per cent.
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Re: THE Price of Crude pt 14

Unread postby kublikhan » Thu 16 Apr 2020, 16:03:58

ConocoPhillips is reducing its 2020 capital expenditure for the second time in one month and is curtailing some production in Canada and the U.S. until market conditions improve. ConocoPhillips is also voluntarily curtailing 200,000 barrels of oil equivalent per day (boe/d) net to the company until market conditions improve. At Surmont in Canada, ConocoPhillips is currently cutting back production due to low Western Canada Select (WCS) prices, which were below US$5 a barrel as of Thursday. By May, the firm expects to cut production by some 100,000 barrels of oil per day bpd gross to 35,000 bpd gross. ConocoPhillips will also begin to curtail production across its operations in the Lower 48 in May.
U.S. Oil Major Voluntarily Cuts 200,000 Bpd
The oil barrel is half-full.
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Re: THE Price of Crude pt 14

Unread postby GoghGoner » Fri 17 Apr 2020, 07:47:37

WTI in the $17s this morning. The last time it was this low was after 9/11 in November of 2001. If it pushes below $15, we would have to go back to 1999. I still don't see any reason why it doesn't crash further unless we see a lot of more of what ConocoPhillips announced -- of course, saying and doing are two different things. It also needs to be done before May to bring prices up to a more acceptable level for oil producers. There have been reports that the government will pay oil companies to cut in the US. I can't imagine the outcry if this happens.

Trump administration eyes paying oil companies to keep crude in the ground: reports

Such a plan would be unprecedented and likely to face resistance from Congress, where Democrats were able to thwart a $3 billion request to fill the Strategic Petroleum Reserve (SPR) outright.

But President Trump has said the government should stock up on oil while prices are at historic lows, and the DOE plan appears to already have some support from Republicans.
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Re: THE Price of Crude pt 14

Unread postby vtsnowedin » Fri 17 Apr 2020, 08:03:02

There will soon come a time when production will be cut to exactly match consumption. That will come when the tankers cant return to Saudi Arabia for another load until the refinery can except the load it has on now as all possible storage tanks will be full. Everybody's wells will have to be throttled to match the ability to ship oil away from the wellhead.
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Re: THE Price of Crude pt 14

Unread postby GHung » Fri 17 Apr 2020, 08:07:49

GoghGoner wrote:WTI in the $17s this morning. The last time it was this low was after 9/11 in November of 2001. If it pushes below $15, we would have to go back to 1999. ........


Now que rocdorc blabbering some cliche about the cure for low oil prices.
Blessed are the Meek, for they shall inherit nothing but their Souls. - Anonymous Ghung Person
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Re: THE Price of Crude pt 14

Unread postby shortonoil » Fri 17 Apr 2020, 08:41:40

WTI in the $17s this morning. The last time it was this low was after 9/11 in November of 2001. If it pushes below $15, we would have to go back to 1999. ........


And the worst is yet to come. China's GDP is down 6.8% from last year, and still falling. The US and Europe aren't looking any better. The US could see 40 million unemployed by year's end. When this is said and done, there won't be much of an oil industry remaining. The cure for low prices is now no production at all, and that is called the Dark Ages.
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Re: THE Price of Crude pt 14

Unread postby JuanP » Sat 18 Apr 2020, 19:19:14

A couple of weeks back I asked here whether it would be possible that some oil prices could fall to $0, and someone here said that would never happen. Well, in some places some types of oil are now selling for -$0.19 per barrel. That is actually less than $0! That is really unbelievable!
https://peakoil.com/business/texas-oil- ... ive-prices
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Re: THE Price of Crude pt 14

Unread postby mmasters » Sat 18 Apr 2020, 19:59:07

Bailout in 3...2...1....
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Re: THE Price of Crude pt 14

Unread postby asg70 » Sat 18 Apr 2020, 20:51:36

mmasters wrote:Bailout in 3...2...1....


With Trump in office that sounds plausible.

BOLD PREDICTIONS
-Billions are on the verge of starvation as the lockdown continues. (yoshua, 5/20/20)

HALL OF SHAME:
-Short welched on a bet and should be shunned.
-Frequent-flyers should not cry crocodile-tears over climate-change.
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Re: THE Price of Crude pt 14

Unread postby sparky » Sun 19 Apr 2020, 05:03:50

.
Nymex crude oil below 20$ and ICE Brent below 30$
that seems to be a ceiling of sort for the moment and probably for a while ,
the International Energy Agency numbers will be interesting , if only to compare with their predictions , :razz:
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Re: THE Price of Crude pt 14

Unread postby rockdoc123 » Sun 19 Apr 2020, 11:49:26

Now que rocdorc blabbering some cliche about the cure for low oil prices.


please explain to everyone here why you with your vast experience in oil and gas understand that for some reason...this time is different. :roll:
That will offer no end of future humorous comment when it turns out to be precisely wrong.

I worked through the price crashes of 1986, 1994, 1999, 2008 and was still on a couple of Boards in 2014. Each time it looked like the end of the world as we know it and each time the price rebounded after considerable consolidation in the industry.
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