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 ...
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.
Always Look on The Bright Side of Life
https://www.youtube.com/watch?v=JrdEMERq8MA
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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.
We need a new version of a Beatles hit....
Glass Donut.
Today's quiz is: What do the majority of people in Saudi Arabia, Iran, Egypt and Syria have in common?
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 $9 or less. He is usually correct, and ahead of the curve. http://www.schorkreport.com/
Gwjack
The Saudis are our allies!
/S
ummm that clip could cause someone to hang themselves
“At these prices, it’s better to use up Saudi Arabia’s oil and keep our Shale in reserve. We know where the Shale is and it isn’t going anywhere.”
Good to know someone that understands markets.
And I thought 1.31 was a good price.
Ultimately counterproductive . Shale producers going into bankruptcy just means that those assets will transfer from weaker financial hands into stronger financial hands. And when the period of consolidation is over — the cure for low commodity prices is lower commodity prices— Saudi Arabia still has the same problem they started out with.
I may have to go camping on the weekend just to get out of the house.
“Small oil companies in America are Tremendously leveraged more and more by practically junk bonds.”
The radio ads seeking oil investors has stopped. Maybe they don’t even have enough ca$h flow to advertise
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/
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.
Not so expensive anymore. The casings are already there.
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