Posted on 03/09/2020 9:54:08 AM PDT by Red Badger
'We are likely to see the lowest oil prices of the past 20 years in the next quarter,' says analyst
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Saudi Arabia has announced it will slash its official selling prices for crude by between $4 and $8 per barrel, Arab News reports, to be in effect from April when the current production cuts expire.
The biggest discounts were offered to buyers in northwestern Europe and the United States.
The announcement pressured already severely hurt benchmarks after the failed meeting of OPEC+ on Friday when Russia refused to take part in further cuts that would have reduced global oil production by a total 3.6 million bpd.
“As from 1 April we are starting to work without minding the quotas or reductions which were in place earlier,” Energy Minister Alexander Novak said on Friday, adding “but this does not mean that each country would not monitor and analyze market developments.”
“We are likely to see the lowest oil prices of the past 20 years in the next quarter,” Arab News’ Frank Kane quoted an IHS Markit analyst as saying.
This is very likely to happen, indeed: at the time of writing, Brent crude was trading close to $32 a barrel, with West Texas Intermediate at below $29 a barrel, with more space to fall as coronavirus-fueled worry about the global economy deepens amid news about new cases, a lockdown for 16 million people in northern Italy and reports of the first case in Washington D.C.
“I don’t think this was premeditated but Saudi Arabia has clearly swung quickly into action to put the Russians under pressure,” Robin Mills, head of consultancy Qamar, told Arab News. “But the Russians, with low debt and a flexible exchange rate, can cope with a few months of low prices.”
Banks have already begun slashing their short-term price forecasts: Morgan Stanley said it had cut its Brent crude outlook for the second quarter to $35 a barrel from $57.50, CNBC reported Sunday.
By Irina Slav for Oilprice.com
Yet gas will stay the same! :( ;(
In a sane world, refinery stocks would do well with reduced input costs and higher margins, and the consumer would get much cheaper gas. We’ll see - it probably won’t work out like that.
Taxes are still a big part of the cost of gas.
As I posted on another thread, I wonder if the goal is for the Saudis to pressure the Russians, or for both the Saudis and the Russians to pressure American production.
It’s 1.85 here and dropping fast.
The 70’s are back!!!!...............Now, can we please have some good music???..........
70s were the opposite, that was the oil embargo and high prices and rationing.
[As I posted on another thread, I wonder if the goal is for the Saudis to pressure the Russians, or for both the Saudis and the Russians to pressure American production.]
That last price war the Saudis waged with US frackers didn’t end so well for the Saudis. US oi production from fracking and total US oil production is currently at record highs. We will see.
Rumor going in on my section of TN that gas stations are shutting off the pumps due to low price. I don’t know how true, but once more and more people hear it many will panic buy.
70’s—— Record high oil/gas prices. Mass gas shortages.
Today—— Exact opposite.
I think it is Iran they are after. Iran is potentially very vulnerable with Coronavirus and even their leadership getting it. Hitting their pocketbooks might bring them down.
It will not because the price oil is a small factor in the retail price of gasoline.
The government makes the most money via taxes. Refining and distribution are highly regulated right done to the exact blend of gas allow to be sold.
The wholesale price of gasoline, adjusted for inflation, is ridiculously cheap and is at historical lows.
Economic warfare. Time to slap huge tariffs on Saudi crude.
The Saudis have a long history of this.
Russia and Saudi are both a—holes. The price war will hurt Russia more I think. Remember Trump has put a lot of sanctions on Russia.
This is all great till we examine potential outcomes in states like Texas. Low or no development leads to an economic disaster like destroyed real estate prices, construction halts, and banks pressured.
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