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 ...
Still way too high!
Drill baby drill
SA tried before via Princely Alaweedy to bankrupt US shale oil producers. He managed to bankrupt a few but what he didn’t realize is that most US shale oil producers are also farmers and ranchers. So they just shut off the oil pumps and go back to their mainstay businesses. Turn the pumps back on when the prices come back up.
The drills will stop when there is no profit margin.
Small oil companies in America are Tremendously leveraged more and more by practically junk bonds.
When, since fracking has been done on a large scale, did SA get the price of oil to 20 a barrel?
maybe some small companies are farmers too but the mid cap ones are NOT FARMERS.
And they are VERY heavily leveraged
Make it so that no US refinery can process any oil other than from the US.
The Saudi’s are attempting to break US oil by dumping oil at less than cost of production.
Treat them like any other cheater — out a tariff on imported oil.
Crush them both. Fill the Strategic Reserve to the top. Order a temporary reduction of the Federal gas tax of 50%.
Strongly recommend that the States and localities do the same.
L
Yup. I remember that. I was assigned to Ft. Sill, OK and the wells were just shut off for the time being.
At these prices, can you pump this stuff INTO the ground?
Prince Al-Waleed tried it around 2014 or so.
Yes mid caps are exposed but the vast Bakken are mostly independents.
Al-Waleed failed.
SA will fail again, I’m not worried.
There are no farmers and ranchers in the oil business. Maybe the mineral owners.
I paid .95/gal today.
Middle East upheaval tends to follow low oil prices. Get ready for fireworks.
At some point an American president should have the balls to remind them that their military couldn’t fight it’s way out of a piss soaked paper bag, and they are making their only protector angry.
Tell them our protection is gone unless they knock off their bullshit.
In a perfect world, seize their oilfields and Mecca. And administer Arabia with a MacArthur style absolute governor and the outlawing of islam. Its long overdue
It’s going to put a big hurting on the oil patch, the layoffs have allready begun and the potential job losses coming will be significant.
One of our biggest customers who is a mid size company, but with a global reach, is forecasting a 70% drop in business for this quarter at a minimum.
There layoffs will be in the thousands.
But it’s okay, because us oil and gas folks are just greedy bastards.
Cheap gas and no place to go.
Fracked oil wells slow or stop production when shut down. They have to be re-fracked to come back to productive levels. Expensive and time consuming.
I don’t even need gas at this point.
Even if it was free.
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