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ronin


Total Posts: 585
Joined: May 2006
 
Posted: 2020-03-17 13:18
Quite apart form the Saudis and the Russians, all energy is as low as it has ever been.

Henry Hub spot ended 2019 lower than 1999. Various European powers ended 2019 at little more than half their levels in 2018. Etc.

And this was before any of the recent upticks in volatility.

"There is a SIX am?" -- Arthur

nikol


Total Posts: 1122
Joined: Jun 2005
 
Posted: 2020-03-17 18:25
Notice that already few years there is global shift from Oil to Gas.

First call was in 2014. Since then major (state/pension) funds started to dump oil-related stocks and all that "Global Warming" stance started to emerge. Now is second call.

Electricity is winning. EV on the battery wins gasoline/diesel in the tank.
Gas is the cheapest way to generate electricity. Coal is also cheap, but it is "evil" now (seems true everywhere, except in Japan).

nikol


Total Posts: 1122
Joined: Jun 2005
 
Posted: 2020-03-23 11:03
VIX 70%
CLK20 (MAY) IV ~ 200% ?
Some ~penny stocks reach to 500%

not good.

nikol


Total Posts: 1122
Joined: Jun 2005
 
Posted: 2020-03-29 16:24
Is it real ??

18 Mar 2020 | 0.19 | $US/Barrel

https://www.oilmonster.com/crude-oil-prices/wyoming-asphalt-sour-price/180/28

Kitno


Total Posts: 491
Joined: Mar 2005
 
Posted: 2020-03-29 16:49
A few negative bids got hit already in the US last week - so says my US oil dealer friend.

No doubt some odd crude/location and global supply is not letting up.

All the soul of man is resolution, which in valiant men falters never, until their last breath.

nikol


Total Posts: 1122
Joined: Jun 2005
 
Posted: 2020-03-31 11:17
How long can it go on?

Apparently, for shale oil (maybe gas?) industry the survival is at the break even. Likely, they get solid slice of 6 trillion bail out package.

However, if they get off the plate and so their volume evaporates, the oil price shall come back to 50+? Or economy is already chocked and cannot absorb the volume at pre-2020 levels?

Apparently, it is not good news for Saudis either, because their costs are in USD, while for Russia it is in RUB.

doomanx


Total Posts: 75
Joined: Jul 2018
 
Posted: 2020-03-31 11:36
@nikol stationarity of the oil market is interesting to think about. If we go carbon-neutral by 2050 lot of big oil firms are sitting on reserves even now that will never be used. I think it's difficult to say with certainty it will go back to 50+.

did you use VWAP or triple-reinforced GAN execution?

nikol


Total Posts: 1122
Joined: Jun 2005
 
Posted: 2020-03-31 11:47
Agree, thats why I question.

Another dimension. Industry shutdown is an experiment on the global scale. Air gets clean. Greta's dream becomes true. But clean air leads to warming. So, it is another disbalancing/destabilising factor. Watch grain prices.
Still, high temperature leads to the demand to cool down working/living space. Remember blackouts in NY and Tokio? And if everybody works at home, remotely...

Kitno


Total Posts: 491
Joined: Mar 2005
 
Posted: 2020-03-31 16:01
Orthodoxy is being spun on its head and it's hard to predict how this plays out economically and societally.

There will certainly be a greater emphasis on green and tighter controls on companies and 'societal guilt' in general to go green - because we did it during the covid-19 shutdown (let's forget the -30% GDP hit)... The first hints of that narrative are already starting to play out in Western politics. #GretaWon.

As for oil prices and reserves - sure but what of e.g. carbon capture? What of the sustainability of renewables (with budget deficients China has already cut subsidies bar EV subsidies) against cheap Fossils? Etc. PV the all-in cost of a (horror) oil power station with carbon capture buying 10y of the oil curve at current prices with the latest carbon capture against PV of the best renewable tech and you might be surprised on the outcome.

One orthodoxy pivot doesn't enforce others. I have no strong view how this plays out aside from the political narrative change and calling BS on a V shaped recovery (for all, bifurcated sure).

All the soul of man is resolution, which in valiant men falters never, until their last breath.

Jurassic


Total Posts: 358
Joined: Mar 2018
 
Posted: 2020-03-31 17:09
where else can you store oil other than a tanker?

nikol


Total Posts: 1122
Joined: Jun 2005
 
Posted: 2020-03-31 18:11
US oil pipeline network but it's full.

@Kitno

You right in this one - low price will stay low for long. Hence shale industry is in trouble.

TonyC
Nuclear Energy Trader

Total Posts: 1342
Joined: May 2004
 
Posted: 2020-03-31 19:22
Jurasic, as to where your store oil

There is a minimum amount if oil that must be kept in the pipelines

James and Jamie Coleman (for those of you from N.O.La, James (RIP) and Jamie and I ride Hermes) used to own a company called IMT, which owned a lot of tank farms. They merged into somebody else's company a few years ago. But theres plenty of tank farm companies around. sprague in new england used to call me all the time cause we had 1.5 mmbbl of storage in Everett Mass. . And of course there's God knows how many storage companies in Cushing Oklahoma. Then theres the SPR in the salt domes, and there are plenty of private salt dome storage down south ....

But all of that is practically full,.

tanker rates have risen to the point where the vitols and glencorse of the world are making less money than they thought they might on carry plays.

But of course that's good for tanker companies. At this point with the economy really hammered, with gasoline prices around the country at $0.60 or $0.90 a gallon because of a lack of demand, stocks are buildinng up even faster then the excess being pumped by the Saudis in their pissing match with the Russians

flaneur/boulevardier/remittance man/energy trader

nikol


Total Posts: 1122
Joined: Jun 2005
 
Posted: 2020-03-31 19:33
Venezuelan recipe:

Oil can be converted into diesel then to electricity to mine crypto. Greta will get mad.

nikol


Total Posts: 1122
Joined: Jun 2005
 
Posted: 2020-04-02 17:39
End of war. Peace.
Tuzemun



Cheng


Total Posts: 2868
Joined: Feb 2005
 
Posted: 2020-04-05 13:23
tanker rates have risen to the point where the vitols and glencorse of the world are making less money than they thought they might on carry plays.

Pls correct me if I'm wrong. My understanding is that Vitol or whoever buys oil at spot and sells it forward, 3 months, whatever, to pocket the difference. The only thing is you need to put it somewhere and since all other storages are full (afaik) you charter a tanker. First come the VLCCs and after a while come the Aframax and whatever is out there. Plus you need some tankers to transport oil from the well to where you get actual dollars for it. So the tanker cos are pricce setters up to the point where it doesn't make sense for Vitol and Aramco anymore, no? Why is this unexpected?

While we are at it, I understood that global overproduction is around 20m bbl/day and total storage capacity available is around 500m bbl. Say Vladimir and MBS become friends tomorrow and agree to cut the overproduction. It should take a while until it comes down so the tankers probably get pretty much filled anyway. What if there is no capacity left?

"He's man, he's a kid / Wanna bang with you / Headbanging man" (Grave Digger, Headbanging Man)

nikol


Total Posts: 1122
Joined: Jun 2005
 
Posted: 2020-04-05 15:24
@Cheng

Looking at the picture, the scenario of agreement between Russia and Saudi is unlikely.

- US is biggest producer and has farthest distance to all markets (tanker cost), except its internal. As an advantage it owns FED as money printing machine, which means that Shale producers might survive at the cost of dilution of monetary base. Their break even is currently at ~40-50, which means that everyone who uses dollar pays the difference.
- Russia is second rival. It is closer to Europe and Asia, i.e. basically stays in the middle. And it has it's own CB while USDRUB is floating. Not perfect, but some it grants some resilience. Their break even is 40$. I read some bravery analytics about sustaining as low as 20$.
- Saudis comes third with quite vulnerable supply route (remember Iran at Hormus) and production (hello Houthies recently hitting wells) and with costs expressed in dollars. Their break even is 80$. This one seems to be the weakest link. They can ease the pain if they switch into Yen/Yuan, but that's highly-likely unlikely.


nikol


Total Posts: 1122
Joined: Jun 2005
 
Posted: 2020-04-07 14:46
it looks that the consensus is emerging

https://www.reuters.com/article/us-health-coronavirus-trump-oil/trump-says-opec-has-not-asked-him-for-a-u-s-oil-production-cut-idUSKBN21O32S

"Normally any coordinated decision by U.S. oil producers to reduce output to boost prices would violate antitrust laws.
But if the federal government leads the charge such an effort would arguably be legal, according to Barbara Sicalides, an antitrust expert at Pepper Hamilton LLP."

svisstack


Total Posts: 346
Joined: Feb 2014
 
Posted: 2020-04-14 18:45
https://www.zerohedge.com/energy/brent-tumbles-saudis-quietly-launch-new-oil-price-war-asian-markets

First Commander of the USS Enterprise

TonyC
Nuclear Energy Trader

Total Posts: 1342
Joined: May 2004
 
Posted: 2020-04-15 20:42
Wsj Negative prices

https://www.wsj.com/articles/glutted-oil-markets-next-worry-subzero-prices-11586943001

flaneur/boulevardier/remittance man/energy trader

someprimetime


Total Posts: 15
Joined: Jul 2018
 
Posted: 2020-04-15 23:22
So, tariffs and then possible war?

nikol


Total Posts: 1122
Joined: Jun 2005
 
Posted: 2020-04-16 13:56
Financial innovation: Buyout of oil deposits.
Knowing the quality of historical misrepresentations of reserves by oil companies this must be a good business (just in case - I am ironic here)

https://www.bloomberg.com/news/articles/2020-04-15/u-s-weighs-paying-drillers-to-leave-oil-in-the-ground-amid-glut

aeco


Total Posts: 14
Joined: Aug 2008
 
Posted: 2020-04-20 12:21
https://www.zerohedge.com/commodities/singapore-oil-trading-giant-files-bankruptcy-after-hiding-800-million-losses-secretly

First major casualty in physical trading. Looks like they were up to Enronesque moves to hide losses. Still not sure how you do that with just futures trading PNL. I imagine Deloitte will get in some heat for this.

Jurassic


Total Posts: 358
Joined: Mar 2018
 
Posted: 2020-04-20 12:56
@aeco

I thought that these physical trading guys just used futures to lock in the spread between spot and not to speculate on

aeco


Total Posts: 14
Joined: Aug 2008
 
Posted: 2020-04-20 13:53
In theory yes, but in practice every physical trader from BP to Cargill will speculate around the information and flows that they have.

svisstack


Total Posts: 346
Joined: Feb 2014
 
Posted: 2020-04-20 18:38
wsj confirmed https://www.bloomberg.com/news/articles/2020-04-19/dollar-steady-with-further-signs-of-virus-easing-markets-wrap

First Commander of the USS Enterprise
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