Posted on 03/08/2020 5:03:21 PM PDT by Hojczyk
Oil prices plunged 30% in early trading after OPEC’s failure to strike a deal with its allies regarding production cuts caused Saudi Arabia to slash its prices as it reportedly gets set to ramp up production, leading to fears of an all-out price war.
International benchmark Brent crude futures plummeted 30% to $32.05 per barrel. U.S. West Texas Intermediate crude dropped 27% to $30 per barrel, its lowest level since Feb. 22, 2016.
“This has turned into a scorched Earth approach by Saudi Arabia, in particular, to deal with the problem of chronic overproduction,” Again Capital’s John Kilduff said. “The Saudis are the lowest cost producer by far. There is a reckoning ahead for all other producers, especially those companies operating in the U.S shale patch.”
After the initial drop the losses were pared somewhat, with each contract trading down slightly more than 21%.
On Saturday, Saudi Arabia announced massive discounts to its official selling prices for April, and the nation is reportedly preparing to increase its production above the 10 million barrel per day mark, according to a Reuters report. The kingdom currently pumps 9.7 million barrels per day, but has the capacity to ramp up to 12.5 million barrels per day.
(Excerpt) Read more at cnbc.com ...
Our cost per barrel at the well is significantly higher than the arabs. They are at less than 2 bucks per barrel if I recall.
They can drop and drop the price and cause us serious financial difficulties.
I think the SPR is pretty full.
They have actually considered shrinking it because the US is not dependent on imports as previously.
Better informed folks than myself have to make that call.
Except that they’ve got so many folks on welfare that they can’t stand low prices for long. Once money stops, then the natives get restless and revolution can’t be counted out.
It is $2.20 in Ellsworth Maine today!
Cheap energy means cheap everything. In the long run it’s fantastic for the economy.
Bring me $2/gallon gas and I’ll believe it.
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Well, if things don’t change that could be headed your way.
And when the Saudis raise the price, there will be an increase in fracking and more off shore production.
EC101 supply and demand.
I'll repeat what I said when those on here said Frackers couldn't survive in under $60/barrel markets:
it's all about wringing out cost and increasing efficiencies in fracking.
They did it to survive sub $60/bbl oil and they can do it again. Automate, Automate, Automate.
“ We used to say lower oil prices good for America. Do we still say that?
Except in Texas and Oklahoma...”
Plenty of indirect labor / Small business support the Oil workers. When a barrel of oil gets in the low 40’s Crews don’t get sent out / layed off. My Step Sisters small Motel business that mostly services Oil Workers in Flatonia TX. gets hit hard when oil prices drops.
This gives the states controlled by rates to tax tax tax
Still $2.59/gal here in the People's Socialist sh*thole of Illinois @ 30 miles S.W. of Shitcago.
The Dallas economy is much more diverse since the last oil price fall in the 80s... but it still ripples through the Texas economy.
The frackers can restart as quickly as they can shut it down.
Gas has been 1.97-2.05 in Louisiana for weeks.
But this news may change all that.
Still Over $2.50 for gas. And it has not come down one bit in the last couple of weeks. I wonder who is pocketing the difference?
Surprising because the refinery where most of the fuel comes from (BP Whiting - one of the largest in the US) is just around the corner from Chicago.
It’s good for:
- low income voters that don’t own stock
- elderly on fixed income or low exposure to stock market
- traders like me that (tip - DWT was $5 a few weeks ago, probably $14 tomorrow)
You don’t just start up again overnight. A healthy $50-$60 per barrel ensures domestic production continues and we pay a reasonable price for gas. Lower oil prices aren’t necessarily good
It was $2.25 today in NE Florida.
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