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$1 Oil: Saudi Arabia's Attempt To Crush U.S. Shale
Oilprice ^ | Tom Kool

Posted on 04/01/2020 3:41:07 PM PDT by nickcarraway

After having crashed nearly 70 percent in the first three months of 2020, benchmark WTI prices are trying to form a bottom around $20 per barrel.

But this psychological threshold is looking increasingly shaky as global crude storage facilities are filling up at an unprecedented pace. OPEC and its partners officially ended their output cut deal today, following the words of Russian Energy Minister Novak that every producer is ‘’free to pump at will’’.

With a flood of physical crude set to hit the market, it will take weeks, not months, for global oil storage space to run out. The storage problem could grow even worse as refining capacity is coming offline due to coronavirus health risks and in some cases a (very) negative crack spread caused by a double whammy of low fuel demand and crude oversupply.

Oilprice.com’s Alex Kimani wrote on Saturday that refining crack spreads are now negative in both US and Asian markets. This means that refiners must pay for every barrel they refine into fuel, which will inevitably lead to even lower demand for crude feedstock.

The gap between supply and demand in oil markets is expected to grow increasingly pronounced this month. Trading giant Trafigura’s chief economist now expects demand for crude to fall by 30 million bpd in April as around 3 billion people remain under lockdown worldwide.

In the meantime, OPEC producers Saudi Arabia and the UAE are preparing to flood European and Asian markets with crude. Bloomberg reported that the Kingdom’s supply has now officially surpassed the 12 million bpd mark,

(Excerpt) Read more at oilprice.com ...


TOPICS:
KEYWORDS: energy; fracking; hydrocarbons; maga; oilprice; opec; saudiaarabia; saudiarabia; shale
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To: FewsOrange
Shale isn't profitible at $20/bbl.

At these prices, it's better to use up Saudi Arabia's oil and keep our Shale in reserve. We know where the Shale is and it isn't going anywhere.

41 posted on 04/01/2020 4:21:29 PM PDT by Yo-Yo ( is the /sarc tag really necessary?)
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To: LibertyWoman

Always Look on The Bright Side of Life
https://www.youtube.com/watch?v=JrdEMERq8MA


42 posted on 04/01/2020 4:22:22 PM PDT by dfwgator (Endut! Hoch Hech!)
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To: nickcarraway

bookmark


43 posted on 04/01/2020 4:22:38 PM PDT by BunnySlippers (I love BULL MARKETS!!)
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To: Lurker

Hmm, I wonder what the Saudi burn rate is on their cash in hand? Any market holdings they have took a hit lately, and they’ve got a restive population that is used to getting lots of subsidies. They can probably burn off a $300-$400 billion before things get really tight.


44 posted on 04/01/2020 4:23:54 PM PDT by glorgau
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To: glorgau

We need a new version of a Beatles hit....
Glass Donut.


45 posted on 04/01/2020 4:25:20 PM PDT by gathersnomoss (Welcf theome to North Mexico, Gringo's it...)
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To: nickcarraway
Saudi isn't the only bad actor in this. I was watching CNBC this afternoon and they showed satellite imagery of multiple oil tankers sitting off the coast of Syria. The tankers had turned off their transponders until they arrived at the Suez Canal, where they need to be turned on. Then they turned the transponders off after exiting the canal. I guess the Egyptians don't really care about the actual origin and destinations of ships traveling through the canal. Oh, need I forget the punch line, the origin of the tankers was Iran.

Today's quiz is: What do the majority of people in Saudi Arabia, Iran, Egypt and Syria have in common?

46 posted on 04/01/2020 4:29:00 PM PDT by ConservativeInPA (It's official! I'm nominated for the 2020 Mr. Hyperbole and Sarcasm Award.)
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To: All

Interesting article, this is. My money is on the longtime accuracy of Peter Schork. He said on Fox Business yesterday that he saw (in no specific time range) that ta crude would go to $9 or less. He is usually correct, and ahead of the curve. http://www.schorkreport.com/

Gwjack


47 posted on 04/01/2020 4:30:05 PM PDT by gwjack (May God give America His richest blessings.)
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To: nickcarraway

The Saudis are our allies!

/S


48 posted on 04/01/2020 4:30:31 PM PDT by Pearls Before Swine
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To: dfwgator

ummm that clip could cause someone to hang themselves


49 posted on 04/01/2020 4:31:55 PM PDT by LibertyWoman
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To: gwjack

https://finance.yahoo.com/news/oils-record-coronavirus-slide-nowhere-184538084.html


50 posted on 04/01/2020 4:32:46 PM PDT by gwjack (May God give America His richest blessings.)
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To: Yo-Yo

“At these prices, it’s better to use up Saudi Arabia’s oil and keep our Shale in reserve. We know where the Shale is and it isn’t going anywhere.”

Good to know someone that understands markets.


51 posted on 04/01/2020 4:33:57 PM PDT by Meatspace
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To: ButThreeLeftsDo

And I thought 1.31 was a good price.


52 posted on 04/01/2020 4:34:16 PM PDT by Redcitizen (Nobody needs a 10 round magazine. You need a 30 round magazine.)
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To: nickcarraway

Ultimately counterproductive . Shale producers going into bankruptcy just means that those assets will transfer from weaker financial hands into stronger financial hands. And when the period of consolidation is over — the cure for low commodity prices is lower commodity prices— Saudi Arabia still has the same problem they started out with.


53 posted on 04/01/2020 4:34:28 PM PDT by ameribbean expat (Attention! All persons having the corona virus...please report to the nearest IRS office. Thank you.)
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To: nickcarraway

https://marketrealist.com/2019/09/refining-crack-spread-overview-you-ever-wanted-know/


54 posted on 04/01/2020 4:34:47 PM PDT by Paladin2
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To: AFreeBird

I may have to go camping on the weekend just to get out of the house.


55 posted on 04/01/2020 4:35:04 PM PDT by Redcitizen (Nobody needs a 10 round magazine. You need a 30 round magazine.)
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To: nickcarraway
Can wells in Texas...the Dakotas...Alaska,etc be shut down (due to low demand,for example) and then brought back online when prices go up? I think I've read that once a well in the US is shut down it can't be brought back.
56 posted on 04/01/2020 4:39:03 PM PDT by Gay State Conservative (The Rats Can't Get Over The Fact That They Lost A Rigged Election)
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To: dp0622

“Small oil companies in America are Tremendously leveraged more and more by practically junk bonds.”

The radio ads seeking oil investors has stopped. Maybe they don’t even have enough ca$h flow to advertise


57 posted on 04/01/2020 4:39:05 PM PDT by Paladin2
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To: nickcarraway

Notice that Ferguson of Saudi-funded J-IDEA group within Imperial College gave us the models that were probably 25x the realistic death rate, easy way to tank US economy and stop shale conversion to oil. https://www.imperial.ac.uk/jameel-institute/


58 posted on 04/01/2020 4:42:47 PM PDT by JungleGoat77 (.)
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To: crusty old prospector

I guess all those farmers and ranchers pumping oil in N Dakota were putting one over me. Gee, all that time I thought these were honest folks.


59 posted on 04/01/2020 4:43:51 PM PDT by Hostage (Article V)
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To: mad_as_he$$

Not so expensive anymore. The casings are already there.


60 posted on 04/01/2020 4:44:59 PM PDT by Hostage (Article V)
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