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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 SolarDave » Mon 20 Apr 2020, 14:30:34

What's easy becomes hard, what's hard becomes easy.

There will be some permanent demand destruction from this.

My mother just ordered $750 of food from Costco yesterday at 6:00 PM and it arrived before 8:00 AM this morning. I don't think she will ever physically drive to Costco again.

My nephew is taking all his classes at home. He loves it (he does not go to school for "community" - he goes to learn). He says he enjoys studying at home and does not miss the "commute" and parking hassles required to go to and from school.

I am shopping more on eBay, Amazon and small company web sites and less at Frys and Best Buy physical stores. I doubt I'll go back to driving around to "shop" as much as I used to even if gasoline is free. The time wasted is too valuable.

So my point is that this crisis is causing behavior changes that were ingrained and "easy" and now have become "difficult" due to social distancing, business closures, etc.

When the crisis ends, reverting to a "drive around" lifestyle will be "hard" and continuing to live an online lifestyle, with the time benefits it delivers, will be "easy."

That will translate into some permanent demand destruction and flattening of the petroleum consumption curve.

It will be quite interesting to see how large the permanent effects will be.
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Re: THE Price of Crude pt 14

Unread postby asg70 » Mon 20 Apr 2020, 14:47:41

kublikhan wrote:Oilprice.com is showing WTI at $-30. WTF negative 30 dollars?


Here's a link:

https://www.cnn.com/2020/04/20/investin ... index.html

Before Short chimes in, no this has nothing to do with ETP.

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 SolarDave » Mon 20 Apr 2020, 14:55:57

shortonoil wrote:
Some people were downright in-your-face about their contempt for this whole thing.


Which is hardly surprising when considering that the chances of dying of suicide are greater than any chance of what looks suspiciously like the yearly flu. ...


You are comparing a "worst case" epidemic (flu), where no one wears masks, everyone goes to work sick, every business remains open, nobody "social distances," everyone keeps flying to spread the disease as far and as fast as possible, driving miles are unchanged, etc etc etc...

With:

A "best case" epidemic (COVID-19) where the whole country is locked down, flights are empty, public transportation is largely shut down, a HUGE number of people are not going to work, driving is obviously seriously curtailed (reducing chances for spreading the disease), etc etc etc...

And you know what? The COVID-19 death total is piling up four times faster than it does during seasonal flu.

This is not going to change dramatically unless a vaccine appears. The effect on the US (and global) economies is not going to go away fast, and that means oil prices will be depressed for a loooooong time.

You really need to think about how much worse this would be if everyone treated it like flu. And stop making irrelevant comparisons. And be ready for cheap gas that no one cares about, because they aren't going anywhere until this is "over."
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Re: THE Price of Crude pt 14

Unread postby GoghGoner » Mon 20 Apr 2020, 15:00:22

If I purchased today's oil contract I would have been paid nearly $38,000 for taking delivery of 1000 barrels of WTI crude tomorrow.

Unbelievable.
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Re: THE Price of Crude pt 14

Unread postby evilgenius » Mon 20 Apr 2020, 15:00:46

Everyone should keep in mind that it was the American threat to conserve that brought Sheik Yamani around. The Saudis feared that more than some competing production. This is proof they were right to be scared of it.
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Re: Is this really peakoil.com & nobody noticed oil is -$0.

Unread postby Plantagenet » Mon 20 Apr 2020, 15:20:44

I noticed but I’m not sure what I think about it just yet.

Its certainly a catastrophe for the US shale BIZ.

And having so much excess oil that they can’t even find places to store it putting the oil market into contango means prices are going stay low for a while.

What do you think it means, Sea Gypsy? 8)

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Re: Is this really peakoil.com & nobody noticed oil is -$0.

Unread postby Outcast_Searcher » Mon 20 Apr 2020, 15:45:30

It's supposedly an anomaly. We'll see.

I didn't even realize such contracts COULD go negative (not being a commodities trader - just observing the markets a bit to gain some economic insight). I had thought that worst case, the May longs could just ABANDON the contracts as worthless, and by lottery or some such thing, large consumers of oil like refineries would get the contracts.

This puts a WHOLE new level of risk on the idea of trading futures contracts, IMO (re me having known very little about it).

Hell, when I saw the initial -$17 price cited in a post, I assumed the poster meant -17 CENTS. Closing at $-37+ today is really something. If that kind of thing goes on for months at every expiration, I wonder how much stress THAT puts on the financial system, not to mention the folks who get "blown up".

Certainly, the WTI futures markets from June on out picture a relatively stable market which will undergo some level of recovery in future months, based on the strong price contango as you go out in time.
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: Is this really peakoil.com & nobody noticed oil is -$0.

Unread postby onlooker » Mon 20 Apr 2020, 16:05:18

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Re: Is this really peakoil.com & nobody noticed oil is -$0.

Unread postby asg70 » Mon 20 Apr 2020, 16:08:49


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 » Mon 20 Apr 2020, 16:10:52

.
Reuters commodities quote Nymex at minus 17.70 $
a few comments
1- this is an epoch making number
2- it's Nymex , a rather dysfunctional market which only apply to North America
everybody else use Icebrent ( quoted at 26$ ) or Dubai , Tapis ....whatever
3- this is for a very few speculative lot linked to the closing May contract ,
a few traders got their private parts stuck in a closing door , no big deal
4- Nymex is basically a straight quote from the Cushing storage level ,
that seems somewhat silly since there is a lot of crude flowing to industrial storage or shipping
5- Nimex has stopped being a serious crude quote and is only a New York speculator tool
I hope this will bury it for good and a better index found
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Re: THE Price of Crude pt 14

Unread postby onlooker » Mon 20 Apr 2020, 16:11:26

So tell us again how the Economy is going to rebound from record unemployment and a negative oil price. Smart traders seem to be hedging per this 300% oil price plummet that it will NOT rebound
Last edited by onlooker on Mon 20 Apr 2020, 16:28:20, edited 1 time in total.
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Re: THE Price of Crude pt 14

Unread postby asg70 » Mon 20 Apr 2020, 16:16:55

onlooker wrote:So tell us again how the Economy is going to rebound from record unemployment and a negative oil price. A smart traders seem to be hedging per this 300% oil price plummet that it will NOT rebound


Low oil prices are good for the economy in general. Peakers USED to understand that. I don't give a rat's ass if the frackers go bankrupt and most of the rest of the US doesn't either. That low oil price will be underpinning civilization as it always does. Powering trucks to keep stores fully stocked. Powering tractors to plow the fields. Powering ships to keep international commerce flowing, etc... So be thankful.

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: Is this really peakoil.com & nobody noticed oil is -$0.

Unread postby sparky » Mon 20 Apr 2020, 16:24:11

.
Peak Oil is production , the rest is ideology

it can take whatever form you might think off and will probably surprise you
we were at the stage of squeezing oil from stones to make the number
then , reality struck , yep tell me it wasn't what was planned ot what people understood

........WHO CARE ! if the consumer tank out or the producers tank out ...same same !
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Re: Is this really peakoil.com & nobody noticed oil is -$0.

Unread postby onlooker » Mon 20 Apr 2020, 16:33:51

Sparky, is trying to tell you ASG that you need a oil price balance. Or else a bankrupt oil industry is not going to produce very much oil to power civilization
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Re: Is this really peakoil.com & nobody noticed oil is -$0.

Unread postby asg70 » Mon 20 Apr 2020, 16:43:33

onlooker wrote:a bankrupt oil industry is not going to produce very much oil to power civilization


There's a looooooooong road up from negative oil prices to Mad Max thunderdome, onlooker. If you only knew how absurd that sounds.

Image

The hydrocarbons will be temporarily left in the ground. When the demand resumes, someone will develop that oil, even if it's not the original owners. In the meantime...

(get ready for it)

BAU...CONTINUES...............APACE.

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: Is this really peakoil.com & nobody noticed oil is -$0.

Unread postby onlooker » Mon 20 Apr 2020, 17:15:25

asg70 wrote:
The hydrocarbons will be temporarily left in the ground. When the demand resumes, someone will develop that oil, even if it's not the original owners. In the meantime...

(get ready for it)

BAU...CONTINUES...............APACE.
[/quote]

While they are left in the ground presumably fairy dust will power the Economy


Image
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Re: Is this really peakoil.com & nobody noticed oil is -$0.

Unread postby Outcast_Searcher » Mon 20 Apr 2020, 17:17:37

sparky wrote:.
Peak Oil is production , the rest is ideology

it can take whatever form you might think off and will probably surprise you
we were at the stage of squeezing oil from stones to make the number
then , reality struck , yep tell me it wasn't what was planned ot what people understood

........WHO CARE ! if the consumer tank out or the producers tank out ...same same !

If it's re COVID-19, any "tanking out" is very temporary.

If it's re technology changing (i.e. EV's meaning we don't NEED anywhere near so much within 2 to 3 decades), then that makes ALL the difference. One causes financial havoc and unaffordability, and the other helps the planet and gives consumers another choice (better, to the extent they choose it).

Peak demand is the polar opposite of peak supply.
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 BahamasEd » Mon 20 Apr 2020, 17:27:51

If I purchased today's oil contract I would have been paid nearly $38,000 for taking delivery of 1000 barrels of WTI crude tomorrow.

Unbelievable.


And how much do you think it would cost to store 42,000 gallons of oil until you could find someone to sell it too?

You could rent 9 5,000 gallon trailers and have them sitting in your front yard, that couldn't cost too much.
The total energy cost of producing and delivering a gallon of gasoline to the end consumer must be less than the energy in a gallon of gasoline for it to be commercially viable.
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Re: THE Price of Crude pt 14

Unread postby copious.abundance » Mon 20 Apr 2020, 17:33:12

Have their ever been any cornies here who thought the price of oil would someday go negative?

Hell, not even I ever thought that would happen. Until today I didn't even think it was possible.

Abundance aplenty!
Stuff for doomers to contemplate:
http://peakoil.com/forums/post1190117.html#p1190117
http://peakoil.com/forums/post1193930.html#p1193930
http://peakoil.com/forums/post1206767.html#p1206767
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Re: THE Price of Crude pt 14

Unread postby rockdoc123 » Mon 20 Apr 2020, 17:52:36

here is a very good discussion of what happened, why and why this isn't somehow the end of the oil industry (only idiots would think it is)

https://oilprice.com/Energy/Energy-General/Why-Todays-300-Oil-Price-Crash-Isnt-As-Bad-As-It-Looks.html

While everyone agrees that the oil market has been battling multiple enemies over the last couple of months - namely storage limitations, overproduction, and low prices - today’s redline move was brought about by another enemy: poor timing.
Speaking of Time
The sharp drop into negative territory for oil futures was brought about by more than “just” storage limits and overproduction. It’s about the timing of future contracts.
$USO and the CLK20
The United States Oil Fund LP (NYSEARCA: USO) - an ETF for crude - undeniably instigated the historic decline in May WTI futures’ today. The reason? Because the futures contract expires on Tuesday.

Bloomberg sources suggest that as of last week, the USO held 25 percent of the outstanding shares of May 2020 WTI oil futures. But that contract will end tomorrow.
Buyers of these contracts must either sell these contracts for oil now or take physical delivery of the oil at the end of May. Of course, an ETF like the USO who deals in paper barrels is not eager to take physical delivery of any amount of oil - even if they could find somewhere to store it.
The result? They must dump their oil, and they must do it now, no matter what the price.
And for those who normally would be willing to take delivery of it, such as refineries and airlines, the stay-at-home orders have pretty much ensured that they don’t want this May contract oil either.
So What Now?
No, the negative oil prices do not mean curtains for the oil industry.
The proof that USO - and other ETFs - are behind today’s plunge can be seen by looking at the June 2020 contract, which although sharply down, is only sharply down in terms of double - not triple - digits.
CLM20 was down 16 percent today versus CLK20’s 309 percent. That June future contract is still trading above $20 per barrel. While this price isn’t necessarily impressive, it is still more than $40 per barrel over May 2020 futures.
This June contract expires May 19 and is a better representation of the true oil market.
This is best depicted by the spread between the two contracts, which is now the widest in history. This widespread indicates not that the oil market is dead in the water, in which case the negative prices would be seen across the June contract as well, but that the market experienced a one-off event that effected the closest month’s prices more profoundly than the next month’s contract prices.
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