The Price of a Barrel of Crude Oil

[Go-NoGo]

Quote:

Originally Posted by pjm-7 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]

Quote:

Originally Posted by SnowballCamper 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]

Quote:

Originally Posted by GenXguy 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]

Quote:

Originally Posted by Freedom56 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]

Quote:

Originally Posted by Markola 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]

Quote:

Originally Posted by 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.

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]

Quote:

Originally Posted by 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...

Yeah!

[Rustic23]

From what I have seen the negative price of oil was in the futures market, and I think for delivery tomorrow or very soon. So it went negative. That makes sense. If you take the oil you have to have a place to store it, and that does not exist.

Caveat: I don't put any of the above out as truth! Just what I read.

[street]

Quote:

Originally Posted by Go-NoGo 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 ?

I might agree with some of your quotes and theory.

The one thing that is questionable is in most state oil consumer laws if that oil well isn't producing in every quarter they have to reclaim that oil site and remove all equipment etc.. This law almost all states that I have worked in have this law to protect the mineral owner and land owner and the state from big oil screwing them over which they try to do as often as they can.

[NYEXPAT]

Quote:

Originally Posted by NYEXPAT Would be very careful with Banks over the next few days!

A oil analyst I follow who correctly called the May contract going negative weeks ago, made a fortune and is donating the money to friends in the industry as this made him physically sick today just recently warned:

Margin Call Warning:

The overnight session on Crude and products will cause some massive margin calls in the next 3 days. Everyone looks at flat price, but look at the June/July spread overnight... It's off $0.80. That is a devastating move for energy funds that profess to carry a "BALANCED BOOK" (ie, not long and not short). I know we say every chart on its own, but this is one instance where I will warn you from experience, this will have a knock-on effect on many other things as large funds will be forced to liquidate portions of portfolios in the next 2-3 days. The banks providing the credit lines to these funds are SCRAMBLING right now!

[Chuckanut]

Finally, they appreciate us drive-off customers.

[Chuckanut]

Quote:

Originally Posted by Qs Laptop Looked at the commodity prices this morning and was shocked to see crude oil was at $10.50 a barrel. Just took a look now, barely an hour later and the price of a barrel of oil is at $5.04! I think the last time oil was this cheap was in the 1970's.

$0.229. The cheapest I ever paid for gas. Early 70’s.

[Beststash]

I view this news (the price of oil collapsing)as good news. With the weakened demand caused by the virus it just shows that eventually with the move to electric vehicles then a large portion of the fossil fuel industry with just go away. I know that will be some time coming but the prediction of the declining need for oil is not only possible but hopefully reality. Time to move on to a 21st century means of energy production. Oil is so 19th century.

[Markola]

Quote:

Originally Posted by Beststash I view this news (the price of oil collapsing)as good news. With the weakened demand caused by the virus it just shows that eventually with the move to electric vehicles then a large portion of the fossil fuel industry with just go away. I know that will be some time coming but the prediction of the declining need for oil is not only possible but hopefully reality. Time to move on to a 21st century means of energy production. Oil is so 19th century.

I genuinely hope so but cheap gas also tends to produce unnecessary things like Hummers.

[Freedom56]

There were news reports today that oil ETF USO was responsible for the plunge. Money flooded into this ETF today by investors who thought they were buying oil at $1 or less through this ETF. But USO unwound the May contract two weeks ago and holds June/July contracts. However starting May 5th, USO which currently owns 25% of the June futures contract will have start rolling over to the the July/August contracts since ETFs cannot take physical delivery. Rumors of a major oil/gas trading firm has taken sizeable losses and is desperately looking for funding. Also rumored is Capital One financial has major oil swap exposure due to the plunging price of oil.

[Perryinva]

If oil stays this low for extended periods, ie: gas at under $1/gal for years, Electric vehicle sales will drop to near zero. I wonder what percentage of oil production airlines consumed?

I do recall my mother always getting “$2 worth please” back around 1965-70, (I’d be 7-12) when all stations were full service, and they checked your oil and cleaned the windshield while it filled. And then gave you Green Stamps. “Fillerup!” was like $4-5. That would be crazy to see again.

[skipro33]

Question about oil storage;
I thought it was possible to just pump crude right back down the well. Buying oil cheap overseas and storing it domestically in US wells. Is that not true?