Peak Oil

[RussellEbertHandball]

In these crazy times, oil in America has hit MINUS $37.00 a barrel. Does that mean service stations will be paying us to buy fuel?

No, that is the futures price of oil for May - a financial derivative not the price sold by oil companies. Chief Energy correspondent of Bloomberg tweet the following. Someone will lose big $$$ on this futures contract but it wont be the oil companies.






Oil Spirals Below Zero in ‘Devastating Day’ for Global Industry
By Javier Blas and Will Kennedy April 21, 2020, 7:29 AM GMT+9:30

The day started like any other gloomy Monday in the oil market’s worst crisis in a generation. It ended with prices falling below zero, thrusting markets into a parallel universe where traders were willing to pay $40 a barrel just to get somebody to take crude off their hands.

West Texas Intermediate futures have been the benchmark for America’s oil industry for decades, seeing the market through booms, busts, wars and financial crises, but no single event holds a candle to this. By the end of trading, the contract had slumped from $17.85 a barrel to minus $37.63.

”Today was a devastating day for the global oil industry,” said Doug King, a hedge fund investor who co-founded the Merchant Commodity Fund. “U.S. storage is full or committed and some unfortunate market participants were carried out.”

In one way, it was just an extreme glitch as traders prepared for the expiry of the contract for delivery in May. Elsewhere, the market proceeded as normal -- Brent futures, the benchmark for Europe in London, ended the day down sharply, but still above $25 a barrel. WTI for June delivery changed hands at $21 a barrel.

But the negative prices also revealed a fundamental truth about the oil market in the age of coronavirus: The world’s most important commodity is quickly losing all value as chronic oversupply overwhelms the world’s crude tanks, pipelines and supertankers. Ultimately, traders were left desperate to avoid having to take delivery of actual oil because nobody needs it and there are fewer and fewer places to put it.

Global Accord
Despite the OPEC+ deal to cut 10% of global production, lauded by U.S. President Donald Trump little more than a week ago, the oil market’s crisis is worsening. The rout will send a deflationary wave through the global economy, complicating the task facing central banks trying to keep economies afloat as the pandemic continues to paralyze business and travel worldwide.

The price collapse could redraw the global map of power as petrostates like Russia and Saudi Arabia, which enjoyed a resurgence over the last 20 years thanks to an oil windfall, see their influence diminished. Exxon Mobil Corp., Royal Dutch Shell Plc and other oil giants are ripping up business plans, desperate to preserve cash.
.......

 

[Forzaport]

This isn't what the boffins behind Peak Oil promised us.

I remember the constant fear about peak oil. Just another example of the limitations of models.

Interesting that the oil producers are structured in such a way that they have to constantly move product and can’t just wind down production when demand drops. This should be the time countries and companies top up their oil/fuel reserves - there likely won’t be another opportunity like this in our lifetimes.

I filled up the car yesterday, first time in 2 months. I predict I won’t need to fill up again until July. Crazy.

 

[philreich]

I remember the constant fear about peak oil. Just another example of the limitations of models.

Interesting that the oil producers are structured in such a way that they have to constantly move product and can’t just wind down production when demand drops. This should be the time countries and companies top up their oil/fuel reserves - there likely won’t be another opportunity like this in our lifetimes.

I filled up the car yesterday, first time in 2 months. I predict I won’t need to fill up again until July. Crazy.

Someone said recently, "My fuel has been fantastic lately - I'm getting 3 weeks per gallon."

 

[RussellEbertHandball]

This isn't what the boffins behind Peak Oil promised us.

Peak Oil was about the physical limitations of known crude oil reserves, ie when you tap a reserve, it gushes out quickly, but as the reserve gets closer to being sucked dry, it takes more work to get the last third of the oil out and keep up daily production.

Shale Oil and Oil Shale, yes they are different, and fracking changed that. USA - 48 continental states had reached peak oil in 1974. But Alaska and fracking changed that.

Probably also the Saudis and Russians not revealing the truth about their total reserves.

 

[raptalia]

No, that is the futures price of oil for May - a financial derivative not the price sold by oil companies. Chief Energy correspondent of Bloomberg tweet the following. Someone will lose big $$$ on this futures contract but it wont be the oil companies.

Oil Spirals Below Zero in ‘Devastating Day’ for Global Industry

The day started like any other gloomy Monday in the oil market’s worst crisis in a generation. It ended with prices falling below zero, thrusting markets into a parallel universe where traders were willing to pay $40 a barrel just to get somebody to take crude off their hands.

www.bloomberg.com

The day started like any other gloomy Monday in the oil market’s worst crisis in a generation. It ended with prices falling below zero, thrusting markets into a parallel universe where traders were willing to pay $40 a barrel just to get somebody to take crude off their hands.

West Texas Intermediate futures have been the benchmark for America’s oil industry for decades, seeing the market through booms, busts, wars and financial crises, but no single event holds a candle to this. By the end of trading, the contract had slumped from $17.85 a barrel to minus $37.63.

”Today was a devastating day for the global oil industry,” said Doug King, a hedge fund investor who co-founded the Merchant Commodity Fund. “U.S. storage is full or committed and some unfortunate market participants were carried out.”

In one way, it was just an extreme glitch as traders prepared for the expiry of the contract for delivery in May. Elsewhere, the market proceeded as normal -- Brent futures, the benchmark for Europe in London, ended the day down sharply, but still above $25 a barrel. WTI for June delivery changed hands at $21 a barrel.

But the negative prices also revealed a fundamental truth about the oil market in the age of coronavirus: The world’s most important commodity is quickly losing all value as chronic oversupply overwhelms the world’s crude tanks, pipelines and supertankers. Ultimately, traders were left desperate to avoid having to take delivery of actual oil because nobody needs it and there are fewer and fewer places to put it.

Global Accord
Despite the OPEC+ deal to cut 10% of global production, lauded by U.S. President Donald Trump little more than a week ago, the oil market’s crisis is worsening. The rout will send a deflationary wave through the global economy, complicating the task facing central banks trying to keep economies afloat as the pandemic continues to paralyze business and travel worldwide.

The price collapse could redraw the global map of power as petrostates like Russia and Saudi Arabia, which enjoyed a resurgence over the last 20 years thanks to an oil windfall, see their influence diminished. Exxon Mobil Corp., Royal Dutch Shell Plc and other oil giants are ripping up business plans, desperate to preserve cash.

Not sure where Bloomberg are getting there information from but the US news reports are that oil is actually being sold at a loss. Producers are paying to have excess production taken off thier hands as they are still producing oil that no one needs albeit at a reduced rate. Sometimes Bloomberg look at figures on a computer screen and do not necessarily see what is happening. You wonder how long before OPEC and the Russians actually shut down production altogether to create a demand so they can off load excess oil stock.

Oil producers are paying buyers to take the commodity off their stocks amid fears

What it means is that oil producers are paying the buyers to take the commodity off their stocks amid fears that storage capacity could run out in May, the BBC reported.

www.freepressjournal.in

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With due respect to Bloomberg it is hard to see how the US oil companies will not lose if they are paying up to $54 a barrel to quit excess stock. If the demand is not there it follows that even when they have quit the excess production the demand will still not be there. Unless of course Uncle Donald fires up the US economy overnight. Maybe that is the assumption that Bloomberg are making- the Us is about to fire up again and it will be business as usual.

 

[RussellEbertHandball]

Not sure where Bloomberg are getting there information from but the US news reports are that oil is actually being sold at a loss. Producers are paying to have excess production taken off thier hands as they are still producing oil that no one needs albeit at a reduced rate. Sometimes Bloomberg look at figures on a computer screen and do not necessarily see what is happening. You wonder how long before OPEC and the Russians actually shut down production altogether to create a demand so they can off load excess oil stock.

Oil producers are paying buyers to take the commodity off their stocks amid fears

What it means is that oil producers are paying the buyers to take the commodity off their stocks amid fears that storage capacity could run out in May, the BBC reported.

www.freepressjournal.in

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With due respect to Bloomberg it is hard to see how the US oil companies will not lose if they are paying up to $54 a barrel to quit excess stock. If the demand is not there it follows that even when they have quit the excess production the demand will still not be there. Unless of course Uncle Donald fires up the US economy overnight.

Who are free press journal?? Bloomberg are a financial media outlet who are also the company that also provide the software and systems that give the info to financial institutions and traders. That's why Michael Bloomberg is worth over $60bil USD.

The comment about losing money is mine not Bloomberg's. It depends who is writing the futures contract as to who exactly loses money in May. Is it independent oil traders, speculators or traders for oil companies??

Look at the spot oil price of today. Its positive not negative. As the story says " it was just an extreme glitch as traders prepared for the expiry of the contract for delivery in May."

 

[StrappingTape]

Do you want the short answer ?

Amazing situation oil producers are paying buyers to take surplus oil off their hands. Never been seen before.

I guess the cartels in Australia will argue that they have to charge us $1.19 per litre in order to keep the service stations open. People have not been traveling as much so I imagine demand for petrol has dropped off.

In any case we should both be grateful as getting ripped off at the bowser is one of the few pieces of normality we have left.

Problem is I filled up both my cars when it was cheap but then haven't gone anywhere so they are both sitting there full. Assuming most are in the same situation all we can do is hear about cheap petrol and have no need for any.. Maybe I'll buy some of the good stuff for the lawn mower.

 

[El Zorro]

Regarding oil, I saw this twitter thread this morning and I thought it was interesting. Not sure how accurate but I thought it explained the situation well.

edit: if you look at the tweet, there are some other related tweets to form a thread.

 

[RussellEbertHandball]

Regarding oil, I saw this twitter thread this morning and I thought it was interesting. Not sure how accurate but I thought it explained the situation well.

edit: if you look at the tweet, there are some other related tweets to form a thread.

Which was why on the previous page I said its not the oil companies that will be making a loss but the traders in oil futures who make the loss.

Why did it drop to -$37?? The individual traders don't have the space to store maybe 1 million barrels or more (ie 159 litres or 48 US gallons per barrel) they bought in a futures contract.

 

[raptalia]

Who are free press journal?? Bloomberg are a financial media outlet who are also the company that also provide the software and systems that give the info to financial institutions and traders. That's why Michael Bloomberg is worth over $60bil USD.

The comment about losing money is mine not Bloomberg's. It depends who is writing the futures contract as to who exactly loses money in May. Is it independent oil traders, speculators or traders for oil companies??

Look at the spot oil price of today. Its positive not negative. As the story says " it was just an extreme glitch as traders prepared for the expiry of the contract for delivery in May."

I am aware of who Bloomberg is and I am not attacking any point you made. I am attacking Bloomberg's assumption that the oil companies will not loose. On the face of a once in a life time event it is hard to see how they will profit from an oversupply and dramatically reduced demand. They may be contracting for May supply but they have to bear the brunt of their write offs in April against a low demand. But as I posted if the US economy kicks off in May as Trump wants the demand for oil may reignite.

Those people being paid to 'buy' the oil atm are not going to loose that is for sure and the oil that is being bought at no cost has to be going somewhere.

 

[RussellEbertHandball]

I am aware of who Bloomberg is and I am not attacking any point you made. I am attacking Bloomberg's assumption that the oil companies will not loose. On the face of a once in a life time event it is hard to see how they will profit from an oversupply and dramatically reduced demand. They may be contracting for May supply but they have to bear the brunt of their write offs in April against a low demand. But as I posted if the US economy kicks off in May as Trump wants the demand for oil may reignite.

Those people being paid to 'buy' the oil atm are not going to loose that is for sure and the oil that is being bought at no cost has to be going somewhere.

I was talking about the people/organisations who purchased May futures contracts and had to take physical delivery in May but anyone with a contract by end of business tomorrow has to take delivery. Those loses aren't made by oil companies.

 

[raptalia]

I was talking about the people/organisations who purchased May futures contracts and had to take physical delivery in May but anyone with a contract by end of business tomorrow has to take delivery. Those loses aren't made by oil companies.

Fair enough. I do not expect any oil companies to go broke.

 

[Holden Hillbilly]

Saudis trying, along with Russia, and succeeding to crush the US fracking industry which costs $30 a barrel to make a profit.

Current prices (not futures):

Texas Gulf MINUS $53
West Texas MINUS $41
East Texas MINUS $43

Texas has filed for 1 MILLION unemployment benefits in 4 weeks.

 

[RussellEbertHandball]

Saudis trying, along with Russia, and succeeding to crush the US fracking industry which costs $30 a barrel to make a profit.

Current prices (not futures):

Texas Gulf MINUS $53
West Texas MINUS $41
East Texas MINUS $43

Texas has filed for 1 MILLION unemployment benefits in 4 weeks.

I don't think oil companies are selling oil at the moment.

So Covid-19 might kill off some hedge funds and speculators. No one is immune from its impact.

 

[RussellEbertHandball]

Saudis trying, along with Russia, and succeeding to crush the US fracking industry which costs $30 a barrel to make a profit.

Current prices (not futures):

Texas Gulf MINUS $53
West Texas MINUS $41
East Texas MINUS $43

Texas has filed for 1 MILLION unemployment benefits in 4 weeks.

Looks like Texas, Louisiana, Oklahoma and Michigan are the ones negative selling, all in the -$40 range. I wont cut and paste the prices tables but you can view all 150 prices at;

Oil Price Charts | Oilprice.com

Oilprices from around the world.

oilprice.com

Oil Price Charts
Oilprice.com, in cooperation with its partners, offers over 150 crude oil blends and indexes from all around the world, providing users with oil price charts, comparison tools and smart analytical features.

 

[Forzaport]

If this oil glut persists, will petrol vehicles become cheaper to run than Teslas?

 

[raptalia]

Adelaide media telling us all the good news about low petrol prices. The problem is once the US and Europe come out of lockdown and get back to work the prices will skyrocket. What is the point of cheap fuel anyway ? We cannot go anywhere.

The RAA is telling us if we paid over 93c per litre today we were ripped off. I looked around down this way and didn't see any 93c per litre fuel. Fuel down south was in the 1.08 to 1.12 range. I topped up at my local Woolies outlet for 1.08 with discount.

 

[RussellEbertHandball]

Plenty of variation across stat capitals and within the city limits according to

Petrol Spy - Cheap Fuel Prices Near Me & Fuel Watch Map

Compare today's best fuel prices by map. Check cheapest petrol station near me. Closest service station pump finder for Caltex Costco BP Coles Express 7 Eleven Woolworths Puma Metro. FuelCheck NSW and FuelWatch WA current price tracker. Save money on Gas E10 Unleaded 91 95 98 Diesel LPG

petrolspy.com.au

 

[RussellEbertHandball]

 

[RussellEbertHandball]