The Price of a Barrel of Crude Oil

[Qs Laptop]

This is the expiration of the May contract tomorrow. The next futures contract was trading above $22 this morning. I’m interested to see what happens tomorrow and Wednesday.

With most people staying at home the busy driving season of the summer vacation period is basically dead. I would expect the June contracts to start falling.

 

[audreyh1]

I'll bet your interest pales in comparison to the folks living in Odessa and Midland - at least to those who didn't suffer a heart attack or stroke today.

I’m sure.

 

[davebarnes]

I'll bet your interest pales in comparison to the folks living in Odessa and Midland - at least to those who didn't suffer a heart attack or stroke today.

Well, the BofA building is 330 feet high. High enough.

 

[Freedom56]

As I type, (according to Yahoo) May crude is 4.4000 -13.8700 (-75.92%)
I'd like to open a position related to the sector. Thinking of 3 possibilities.
Exxon, Chevron, or Fidelity Select Energy Portfolio (FSENX)

Any other ideas/suggestions ?

Did you apply that logic to Eastman Kodak?

Oil and gas is a circular firing squad and is not a suitable sector for investing. I have posted many times telling people to avoid this sector for the past four years. Here are the reasons why:

1- It's a capital intensive sector with very little ROI.

2- Many independent oil producers will be out of business soon. The bond market is signalling this.

3- Fund managers are divesting from this sector in record numbers

4- Dividends are not safe with the major oil companies. Many are issuing debt or selling assets to support their dividend. How long can they keep that up?

5- The future is even more grim as electric car battery prices continue to fall and the storage density increases. Automobiles account for 70% of the demand for crude.

This a sector that is going through Darwinism with the surviving companies being heavily wounded and will have to restructure due to heavy debt loads wiping out common shareholders.

 

[REWahoo]

Well, the BofA building is 330 feet high. High enough.

+1

Oil prices may not be the only thing falling in Midland.

 

[Freedom56]

The May contract is down to -$53 dollars. This is what happens when traders get too long in a market.

 

[Gumby]

What I would want to have today is a large, empty crude oil storage tank.

 

[ownyourfuture]

+1

Oil prices may not be the only thing falling in Midland.

That's a cold & disgusting statement.
I respect that

 

[Dtail]

The May contract is down to -$53 dollars. This is what happens when traders get too long in a market.

So how does this pricing affect the price of gas short term?

 

[Fermion]

At a negative $6 per bbl.
Buy that F-250 and drive until you drop.

Just don't ever try and use the 4x4 function

 

[audreyh1]

Wow, I’m seeing like -$38 per barrel!

 

[LRDave]

Time to start capping the wells?

 

[pjm-7]

Hey Mr. Putin how's that oil price war of yours going?

 

[ownyourfuture]

How much will they pay me to fill up my tank tomorrow......LOL

 

[frayne]

+1

Oil prices may not be the only thing falling in Midland.

Think of the future cheap real estate just around the corner in the Texas oil patch.

 

[Go-NoGo]

Hey Mr. Putin how's that oil price war of yours going?

As much as I would this to backfire on Saudi Arabia and Russia, I fear they will have achieved some of their goals - that is to drive some of the shale operators out of business. The oil majors will then step in and buy these assets at fire sale prices and then cap the wells so as they do not undercut them in the future

I am not (or ever was) in the oil business so this is speculation on my part - anybody with more knowledge care to lend some insight into how this is going to play out for the US shale ?

 

[SnowballCamper]

Without much pressure to open up the American consumer, I see this as dire. Demand dropped due to coronavirus, and as I smell the winds, I don't see governors opening back up until there is a vaccine. A few will try to incrementally open up, but then the cases will spike, and then shut back down. How else will the oil demand come back? Might be the start of some serious deflation...not good in my humble opinion.

 

[NYEXPAT]

Would be very careful with Banks over the next few days!

 

[Closet_Gamer]

You have to pay the Germans for the privilege of holding their debt.
And people will pay you to take their oil off of their hands.

Toto, we are not in Kansas anymore...

 

[GenXguy]

I don't see governors opening back up until there is a vaccine.

I don't think a vaccine requirement is listed in any phase of the guidelines that were released, and I haven't specifically heard of any governors that were planing to stay locked down until a vaccine is available. That's not supposed to for a year to 18 months and possibly longer. I don't foresee lockdowns in any state for the long!

 

[SnowballCamper]

I don't think a vaccine requirement is listed in any phase of the guidelines that were released, and I haven't specifically heard of any governors that were planing to stay locked down until a vaccine is available. That's not supposed to for a year to 18 months and possibly longer. I don't foresee lockdowns in any state for the long!

I do hope you are correct (still have plans for a big camping trip to British Columbia). And yes the criteria have mostly to do with testing, tracing and treatment capacity. But unless a development reduces the mortality rates, it's a rare politician that will go ahead with opening up the economy while many are dying.

 

[Markola]

Energy ETFs are tracking stocks not the short term price swings of crude oil. The question you should be asking is how have energy ETFs performed during the last four years. Many energy stocks are going to zero. The irrational trading that you see in energy stocks is due to fund flows and re-balancing.

Four years? The annual growth rate of VDE since its inception in 2004 is .38%. You read that right: Point three eight percent after 16 years. I’d run from that sector as if it was a diesel Pinto.

 

[Freedom56]

Four years? The annual growth rate of VDE since its inception in 2004 is .38%. You read that right: Point three eight percent after 16 years. I’d run from that sector as if it was a diesel Pinto.

I should have said 6 years ago. The oil and gas sector has been in a secular bear market since June 2014. It had a run up from 2003 to 2009 and collapsed in 2009 with the rest of the market. It then had a run up to new highs from 2009 to 2014. However the collapse this time is beyond repair. The balance sheets of oil companies were fairly good in the early 2000's but after 2009 they bloated themselves with too much debt and even bought back stock while issuing more debt.

 

[audreyh1]

Without much pressure to open up the American consumer, I see this as dire. Demand dropped due to coronavirus, and as I smell the winds, I don't see governors opening back up until there is a vaccine. A few will try to incrementally open up, but then the cases will spike, and then shut back down. How else will the oil demand come back? Might be the start of some serious deflation...not good in my humble opinion.

Governors aren’t going to wait for a vaccine, IMO. They’ll probably maintain bans on large groups, and tell the most vulnerable to stay home including keeping elderly care homes off limits.

 

[audreyh1]

You have to pay the Germans for the privilege of holding their debt.
And people will pay you to take their oil off of their hands.

Toto, we are not in Kansas anymore...

Yeah!