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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 dolanbaker » Sun 19 Apr 2020, 12:41:10

Looks like we’re about to go on the supply price rollercoaster!
Collapse in demand - excessive supply - low prices - wells shutting in - eventual increase in demand - surplus supply consumed - lack of fresh supplied - oil producers refuse to reopen wells until prices rise to the “correct” range - huge leap in prices untill supply resumes.
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Planned obsolescence, one of the largest contributors to the man made element of climate change, but the one least discussed: dolanbaker
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Re: THE Price of Crude pt 14

Unread postby REAL Green » Sun 19 Apr 2020, 12:54:47

dolanbaker wrote: eventual increase in demand



I am curious how much demand returns or have we just witnessed peak globalism and peak demand? I do agree the damage to the oil complex will be significant and supply will surely suffer but how much demand will return is a big unknown. This is uncharted waters in regard to the global economy.
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Re: THE Price of Crude pt 14

Unread postby asg70 » Sun 19 Apr 2020, 12:57:46

dolanbaker wrote:Looks like we’re about to go on the supply price rollercoaster!
Collapse in demand - excessive supply - low prices - wells shutting in - eventual increase in demand - surplus supply consumed - lack of fresh supplied - oil producers refuse to reopen wells until prices rise to the “correct” range - huge leap in prices untill supply resumes.


The "huge leap in prices" (aka oil shock) is highly speculative. Last time I read up about fracking I learned that they can set up shop and resume drilling surprisingly fast once the price signals are there. And it doesn't really matter to J6P if the drilling resumes courtesy of the same underlying ownership or not. Whoever winds up with these assets in the case of insolvency will want to put them to good use as soon as possible.

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 dolanbaker » Sun 19 Apr 2020, 13:05:43

REAL Green wrote:
dolanbaker wrote: eventual increase in demand



I am curious how much demand returns or have we just witnessed peak globalism and peak demand? I do agree the damage to the oil complex will be significant and supply will surely suffer but how much demand will return is a big unknown. This is uncharted waters in regard to the global economy.

Even with an expected partial recovery to "near normal" economic activity, Oil demand will return to about 90% of its previous peak just before the SHTF, with excessive supply being shut in, there will be a lag before supply drops to match demand and when demand recovers there will be another lag, this is when prices are likely to shoot up!
Religion is regarded by the common people as true, by the wise as false, and by rulers as useful.:Anonymous
Our whole economy is based on planned obsolescence.
Planned obsolescence, one of the largest contributors to the man made element of climate change, but the one least discussed: dolanbaker
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Re: THE Price of Crude pt 14

Unread postby dolanbaker » Sun 19 Apr 2020, 13:07:47

asg70 wrote:
dolanbaker wrote:Looks like we’re about to go on the supply price rollercoaster!
Collapse in demand - excessive supply - low prices - wells shutting in - eventual increase in demand - surplus supply consumed - lack of fresh supplied - oil producers refuse to reopen wells until prices rise to the “correct” range - huge leap in prices untill supply resumes.


The "huge leap in prices" (aka oil shock) is highly speculative. Last time I read up about fracking I learned that they can set up shop and resume drilling surprisingly fast once the price signals are there. And it doesn't really matter to J6P if the drilling resumes courtesy of the same underlying ownership or not. Whoever winds up with these assets in the case of insolvency will want to put them to good use as soon as possible.

The smart boys will wait until the price is right.
Religion is regarded by the common people as true, by the wise as false, and by rulers as useful.:Anonymous
Our whole economy is based on planned obsolescence.
Planned obsolescence, one of the largest contributors to the man made element of climate change, but the one least discussed: dolanbaker
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Re: THE Price of Crude pt 14

Unread postby sparky » Sun 19 Apr 2020, 15:17:36

.
The speed of renewing drilling for fracking is certain on a purely technical point
somehow , I doubt if private money will be forthcoming as abundantly as before if Nymex is not showing some resilience at 50 $/B
mind you , the world is full of idiots with money to waste
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Re: THE Price of Crude pt 14

Unread postby asg70 » Sun 19 Apr 2020, 18:21:14

Either way it's cool with me. I won't be paying at the pump anymore because I have an EV.

/smug

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 REAL Green » Sun 19 Apr 2020, 19:18:21

asg70 wrote:Either way it's cool with me. I won't be paying at the pump anymore because I have an EV.

/smug


You don't really think you are going to escape the effects of oil price problems just becuase you have an EV? LMFAO There are so many other issues that will hammer you hard wether you have an ICE or an EV.
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Re: THE Price of Crude pt 14

Unread postby GoghGoner » Sun 19 Apr 2020, 20:06:19

GHung wrote:
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.


Oil (WTI) down in the 15s right now -- the rug was pulled out after open tonight. Rig counts are dropping fast but that doesn't help for six months. What an absolute mess out there right now. I wonder if it won't go negative and gas stations will be paying us to hoard gasoline.

EDIT: 3 secounds later and it is in the 14s.
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Re: THE Price of Crude pt 14

Unread postby Outcast_Searcher » Sun 19 Apr 2020, 23:26:17

GoghGoner wrote:
GHung wrote:
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.


Oil (WTI) down in the 15s right now -- the rug was pulled out after open tonight. Rig counts are dropping fast but that doesn't help for six months. What an absolute mess out there right now. I wonder if it won't go negative and gas stations will be paying us to hoard gasoline.

EDIT: 3 secounds later and it is in the 14s.

From what I understand, the fear is running out of storage. At that point, sufficient production more or less HAS to shut down, since just dumping it on the ground will incur rather stiff penalties.

Now, I've noticed stocks like CVX (Chevron) doing VERY WELL since the low of the stock market on March 23rd (re looking at the S&P 500 chart). I got a big old premium for a May 50 strike put then with the stock around $54, and here we are with the stock at $87+.

Similar trend, though not as steep, for Shell, BP, and Exxon-Mobil.

Hmmm. I'm sure I'm missing something, but if such stocks don't turn down soon, I REALLY don't get it.

Looking at the WTI futures, the oil market thinks this is only a short term thing. For example, when I checked on Marketwatch recently, the front month WTI was about $15.30, but August is nearly $31. Also May (current month) is down $3, but August is down only 37 cents.
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 » Mon 20 Apr 2020, 05:23:54

.
@ Outcast-Searcher
" Hmmm. I'm sure I'm missing something, but if such stocks don't turn down soon, I REALLY don't get it."

that's why I don't touch the stock market or Hong Kong racing ,
there is so much rigging of the game ,it's hard to know which one is current

two possibilities ,
- the big oil know ( or think they know ) that the federal cavalry is coming
- even with a depressed demand ,the drop in oil price give them a fat profit and they are filling up with dirt cheap crude
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Re: THE Price of Crude pt 14

Unread postby REAL Green » Mon 20 Apr 2020, 06:11:49

sparky wrote:.
@ Outcast-Searcher
" Hmmm. I'm sure I'm missing something, but if such stocks don't turn down soon, I REALLY don't get it."

two possibilities ,
- the big oil know ( or think they know ) that the federal cavalry is coming


Right, sparky, where has the stock market reflected reality well in the past few years. There is unprecedented FED intervention in all markets now. Price discovery is dead. Free markets may be a thing of the past becuase can the markets ever normalize after this latest event. The FED tried a taper months ago and was hardly able to normalize. The situation is worse now. I quit looking to the markets years ago for advice other than herd mentality. It is now a tool of the central banks to maintain the wealth effect, protect too big to fail and maintain assets prices so liquidity is good.
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Re: THE Price of Crude pt 14

Unread postby shortonoil » Mon 20 Apr 2020, 07:04:37

Oil (WTI) down in the 15s right now -- the rug was pulled out after open tonight. Rig counts are dropping fast but that doesn't help for six months. What an absolute mess out there right now. I wonder if it won't go negative and gas stations will be paying us to hoard gasoline.


Oil is $13 this morning, and the industry will never recover; nor will the economy. The only thing that you can now believe is what you see in the "real world" with your own eyes. The stories are made up, the pandemic was made up, the central banks coming to the rescue is made up. We are at the end of the oil age, and that includes everything that has gone with it. There is no help coming because the helpers can not even help themselves.

In my area of the real world there are no planes in the sky, and over my head was one of the busiest air lanes in the nation. There are no ships on the Chesapeake Bay which has been for the last 500 years one of the busiest shipping lanes in the world. When Chesapeake shipping has stopped so also has the east coast of the US from New York to Georgia. There is very little traffic, and only a few stores, and businesses are still open. In my real world almost every thing has stopped. Turn off the television and the internet, and go take a "real" look at yours. The rest are only acting as distractions to burn up what little time there may be remaining.
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Re: THE Price of Crude pt 14

Unread postby GHung » Mon 20 Apr 2020, 07:11:45

Outcast_Searcher wrote:
GoghGoner wrote:
GHung wrote:
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.


Oil (WTI) down in the 15s right now -- the rug was pulled out after open tonight. Rig counts are dropping fast but that doesn't help for six months. What an absolute mess out there right now. I wonder if it won't go negative and gas stations will be paying us to hoard gasoline.

EDIT: 3 secounds later and it is in the 14s.

From what I understand, the fear is running out of storage. At that point, sufficient production more or less HAS to shut down, since just dumping it on the ground will incur rather stiff penalties.

Now, I've noticed stocks like CVX (Chevron) doing VERY WELL since the low of the stock market on March 23rd (re looking at the S&P 500 chart). I got a big old premium for a May 50 strike put then with the stock around $54, and here we are with the stock at $87+.

Similar trend, though not as steep, for Shell, BP, and Exxon-Mobil.

Hmmm. I'm sure I'm missing something, but if such stocks don't turn down soon, I REALLY don't get it.

Looking at the WTI futures, the oil market thinks this is only a short term thing. For example, when I checked on Marketwatch recently, the front month WTI was about $15.30, but August is nearly $31. Also May (current month) is down $3, but August is down only 37 cents.


I just tuned into WTI at $11.22 That's a lot of cure, eh rocdoc? How long before the patient starts responding??
As for stocks, I suspect having close to $6 trillion dumped onto the economy has a lot of Wall Streeters desperate to find something, anything, to place bets on. It's all they do, after all. And it's not their money.
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Re: THE Price of Crude pt 14

Unread postby vtsnowedin » Mon 20 Apr 2020, 07:39:56

Apparently the point of no storage left to fill has been reached. Turn the lights off as you leave and maybe we will call you next month.
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Re: THE Price of Crude pt 14

Unread postby GoghGoner » Mon 20 Apr 2020, 08:03:32

Looks like XOM is down significantly pre-market. The WTI price for December is $33 and has only dropped $0.70 on the day. So there is a mega-contango setup right now. It could be that XOM is still hedging production at a relatively decent price or just waiting to hedge until the lockdowns are eased. With their dividend, it seems like a decent bet.

Here is a market expert I follow on twitter:

We have WTI data all the way to 1982 and it's indeed the largest one day drop (larger than January 1991, when it dropped 33.7%). But let's see where we close.
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Re: THE Price of Crude pt 14

Unread postby GHung » Mon 20 Apr 2020, 08:11:05

vtsnowedin wrote:Apparently the point of no storage left to fill has been reached. Turn the lights off as you leave and maybe we will call you next month.


Yesterday, my wife and I ventured out for the first time in the last couple of weeks. She needed some basic meds and a few other things. We went to the next county over to the Walmart because the only big market in our county is still pretty picked over. Some observations:
Traffic was quite low for a Sunday. Not much fuel demand going on here.
Shelves were fairly well stocked. While, being the "doomer preppers" we are (actually just frugal homesteading hermits who typically buy in bulk and who were not panicked by recent events) we were able to get a few things we wanted. Years ago, after the first SARS scare, I bought a case of 3M N95 masks and a case of Purell hand sanitizer from a guy at the flea market for pennies on the dollar and put them in the root cellar. Not sure why. We are putting them to good use these days if we need to go out, and sharing them with family.
At least 50%, probably more, of the people in the Walmart were absolutely NOT doing the social distancing thing. Some folks, mainly elderly, were wearing masks and taking all of the recommended precautions, as were we, but many were blatantly defying the precautions set up by the store. This in a county that is an area hot spot for covid-19. Some people were downright in-your-face about their contempt for this whole thing. This is Trump Country after all.
We got what we needed and quickly made our way to the car.
Regular unleaded was $1.48 at one station.
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Re: THE Price of Crude pt 14

Unread postby shortonoil » Mon 20 Apr 2020, 08:17:15

I just tuned into WTI at $11.22 That's a lot of cure, eh rocdoc? How long before the patient starts responding??


They have already taken out a couple of major producers; Iran and Venezuela for about 5 mb/d to support prices. The oil market still needs about 25 mb/d eliminated to bring it back into balance. This is a last man standing game. When many of the world's older fields are shut down, it will not be possible to re-start them because the oil will be lost forever in the formations when the pressure is removed. This is an attempt to permanently remove 25% of the world's production to save the other 75%. They have so far shut down much of the world's economy by hook, or by crook to accomplish it. But, the chances of the world's economy restarting after wards are just about zero. Petroleum has already fallen too far down the depletion curve for that to take place. They have made the mistake of confusing barrels with available BTU, or they are just playing their last desperation card in the hopes that it may somehow work? Remember that in 1960 Saudi Arabia was making mountains of money at $2.88 a barrel. Now they can't even pay the power bill at $11.22. Nothing with oil has ever happened by accident.
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Re: THE Price of Crude pt 14

Unread postby GHung » Mon 20 Apr 2020, 09:30:00

For those of you who tend to trust mass media headlines, you're going to love what's up on CNN Business right now:

Stocks sink as oil craters

US oil prices crash to under $1 a barrel, the weakest level in 21 years
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Re: THE Price of Crude pt 14

Unread postby rockdoc123 » Mon 20 Apr 2020, 11:02:09

This is a last man standing game. When many of the world's older fields are shut down, it will not be possible to re-start them because the oil will be lost forever in the formations when the pressure is removed.


Oh really? Please explain that to everyone here and point to exactly which fields you are referring to. Perhaps Ghawar? Well, can’t be that one given the water flood has nothing to do with trying to maintain reservoir pressure and all to do with sweep efficiency. You can turn the water flood off and back on and it will have zero effect on ultimate recovery. How about some of the other “largest” fields such as Burgan in Kuwait….nope doesn’t work that way there either, how about Gachsaran….nope not there either. But please enlighten us with your obvious incredible skills in petroleum engineering which must have been acquired from a Nigerian mail-order college. :roll:

Let me summarize what is going on here. Prior to the Covid pandemic demand in 3Q of 2019 demand and supply were trading places back and forth at around 101 MMbbls/d. The response to Covid (shutting down airlines, businesses, cruise lines, stay at home orders) had a serious effect on demand dropping it to a level not seen since 2003 and then the Saudis flooded the market with an additional 2.5 MMbbls/d which resulted in a very serious oversupply of crude. So much crude is now available because of these two factors that there is basically no storage left. Storage was already decreasing due to contango but the fact some US companies were hedged allowed them to keep producing, very little in the way of shut-ins in the US at all and with nobody to buy the extra crude it has gradually filled up all available storage. Hence the serious drop in prices….too much supply for current demand and no place to store that supply. There is a difference of opinion amongst analysts as to how soon oil demand will recover once the Covid crisis is behind us, some still maintain it could happen by 4th quarter but most are looking to 2021 sometime. During the next months what will happen is companies without large cash reserves will first try to get relief on debt payments and if that fails they will look to outright sale of their company to well heeled large companies or merger with other companies. Oil production in the US over 2020 will continue to decline with natural early phase accelerated decline amongst the tight unconventional fields (not being replaced by new production) doing most of the heavy lifting aided by some wells being temporarily shut-in. The combination of less production and recovering demand will eventually bring supply and demand back into balance. I think it is very naïve to think that somehow the world's demand for oil suddenly changed because of a super-flu. It didn’t. When that is behind us people will want to go on holiday, they will go back to driving the same amount they did previously and will use their heating and air conditioning just like they did previously. People are not going to suddenly migrate to alternate energy given gasoline prices are low. The big control on-demand recovery is going to be jobs and speed of recovery. How many jobs were permanently lost during the shutdown and how many will take some time to reappear. If people don’t have salaries then their energy consumption is necessarily lower. That being said prior to the crisis jobs were at an all-time high which favors well for a recovery.
As I said previously I've been through a number of price crashes. In each case the industry responded in the exact same manner, lower costs, shut-in production, re-organize, consolidate. And that is exactly what is starting to happen now.
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