What's going to happen to crude oil

DTBA

War Hero
Given WTI futures just hit $4.46/bbl - although Brent is still near $27/bbl - it's a fair bet that it hasn't worked, or at least not in the way people had hoped. There will however be a significant number of US companies stopping production which will feed through in due course and suit other agendas.
Apparently the front month WTI for May is $1.03 a barrel. I have no idea what any of that means. Do we have to go free another desert country again soon?
 
Given WTI futures just hit $4.46/bbl - although Brent is still near $27/bbl - it's a fair bet that it hasn't worked, or at least not in the way people had hoped. There will however be a significant number of US companies stopping production which will feed through in due course and suit other agendas.
I was just about to post this story.
Oil price plunges to lowest level since 1986 as world drowns in oversupply

The economic slowdown caused by COVID-19 is pushing oil prices down to their lowest level in more than 30 years.

The most current futures contract for West Texas Intermediate fell by $8 US a barrel on Monday, going as low as $10.10 US in a plunge of more than 40 per cent.

If that level holds until the end of the day, it will be the lowest closing price for WTI since March 1986.
The immediate problem today (Monday) is that monthly delivery contracts get finalised tomorrow, and anybody still holding oil on the close of business today will have to find a place to store it, and that's getting harder.

Storage tanks on land are filling up, and companies are renting tankers to find some place to put it.

The OPEC+Russia+others have agreed to cut 10 million barrels a day of production, but demand has dropped by 25 million barrels a day, so there's still a massive over-supply in the market.
That's because there's not enough demand for the stuff that's already out there. The oil cartel known as OPEC tried to address that earlier this month by promising to pump 10 million fewer barrels of oil every day, but even that huge cut isn't enough to offset the corresponding drop in demand.

Lockdowns, travel bans and the general economic slowdown associated with the COVID-19 pandemic have reduced demand for oil by about 25 million barrels a day, so OPEC turning off the spigots by 10 million barely makes a dent.
Producers are having to shut down rapidly, and that will cause damage to some production, which means it will not be able to come back on line later.
"The oil price is now ordering producers to halt production and it is happening at high speed and in an unorderly fashion. This is creating damage to production and some of it will never come back online again."
 
Apparently the front month WTI for May is $1.03 a barrel. I have no idea what any of that means. Do we have to go free another desert country again soon?
If you wouldn’t mind. That would terribly friendly of you.
 
Not sure what this will mean for the man in the street....

Financial Times

US oil prices crashed below $5 a barrel on Monday, hitting the lowest level since the contract launched in 1983, as the collapse in demand triggered by the coronavirus pandemic leaves the world awash with crude that it is struggling to store. West Texas Intermediate, the US marker, lost 74 per cent on Monday, sinking to a low of $4.04 a barrel, on warnings that storage could fill up within weeks — including at the benchmark’s delivery hub of Cushing, Oklahoma. Lockdowns imposed in many of the world’s major economies have sent crude demand tumbling by as much as a third, leaving the industry facing what Jefferies analyst Jason Gammel called perhaps “the bleakest oil macro outlook” he had ever seen. Physical grades in many North American regions have fallen into the low single digits — with some contracts changing hands for as little as $2 a barrel — reflecting a dearth of buyers able to take delivery, even as prices for later contracts have held up marginally better due to some investors betting on an eventual rebound. In Canada, spot prices for Alberta’s heavy oil, which sells at a deep discount to WTI, traded at below minus $6 a barrel in the spot market, according to traders and brokers. The possibility of negative prices for the main US grades is growing, with the prospect that producers could pay traders to take oil off their hands to try and forestall the shutdown of fields ahead of their rivals. Stephen Schork, editor of oil-market newsletter The Schork Report, said he expected access to storage capacity in the US to be exhausted within the next two weeks — and cautioned that the collapse of the country’s oil consumption was accelerating. “It just gets uglier from here,” Mr Schork said, adding that sharply rising unemployment numbers meant fewer and fewer Americans would be driving, hurting petrol demand even during its peak summer months. “This summer is dead on arrival. The biggest demand months are not going to happen,” he said. Part of the rapid decline in WTI prices reflects technicalities around the contract for oil to be delivered in May, which expires on Tuesday while short-term storage issues are severe. Still, WTI for June delivery was also down 10 per cent at $22.62, while Brent crude, the international marker, dropped 5 per cent to $26.72. Line chart of West Texas Intermediate showing US oil tumbles to lowest level since the mid-1980s Traders said contracts for later delivery were being propped up by hopes the worst of the demand destruction could be passed by the summer, if lockdowns and travel bans are eased. But others are questioning whether the record-breaking gaps between spot sales and future prices are sustainable. “The May contract expires tomorrow so volume on it is going to be very light. The June contract is more reflective of the changes,” said Olivier Jakob at Petromatrix. “That being said, oil is very weak . . . The big thing right now is destruction of demand due to the virus.” Wall Street opened lower, dragged down by weakness in energy stocks. The S&P 500 was down 0.5 per cent in New York. The sub index for energy was off 4.5 per cent. European indices steadied, with the continent-wide Stoxx 600 closing 0.7 per cent higher, while London’s FTSE 100 and Frankfurt’s Dax gained 0.45 per cent. Crude prices have plummeted this year on the possibility that the coronavirus outbreak will cause a deep global recession. The number of Covid-19 infections worldwide topped 2.4m as of Monday, according to Johns Hopkins data, with more than 165,000 dead. The latest developments “painted a grim picture of a world still firmly in the grip of the coronavirus crisis, amplifying worries about sinking oil demand”, said Vandana Hari, founder of Vanda Insights, a Singapore-based energy research firm. The deepening fall in oil prices has come despite an Opec-backed deal to cut roughly 10 per cent of global crude supply. Reductions of varying magnitude are planned to run until April 2022 as part of efforts to stabilise prices. Recommended Q&AOil Coronavirus, Opec and shale: FT energy reporters answer your questions on the oil industry Baker Hughes data on Friday showed that the number of active oil rigs in the US has dropped by more than a third over the past month. But signs of curtailed US supply have done little to boost prices. “Too much oil, with nowhere to put it,” said Kit Juckes, a senior strategist at Société Générale in London, noting that “oil-sensitive currencies are under pressure again”. Equity markets in Asia came under pressure earlier in the session. Japan’s benchmark Topix fell 0.7 per cent and Australia’s S&P/ASX 200 shed 2.5 per cent, while Hong Kong’s Hang Seng was flat. In fixed income, the yield on the 10-year US Treasury was little changed at 0.623 per cent.
 
Looks like the Donald has a huge problem inbound. This could wipe out the shale oil industry, it's jobs and it's tax revenue.
 
Look at the prices over time.


73-afd7dfe3ffcd-standard.png
 
On the bright side, it will also destroy the economics of Greta's preferred solutions in the near term.
 

endure

GCM
Don't worry, this commentator underneath the BBC article knows what to do:
365. Posted by steve25 minutes ago

All this extra oil around - nowhere to store it , so why not donate it to the emergency services at this time of crisis. Also to all key workers in postal , food etc.
 

endure

GCM
Don't worry, this commentator underneath the BBC article knows what to do:

We could fill all the ambulances and fire engines up with Brent Crude...
 
Not sure what this will mean for the man in the street....

Financial Times

US oil prices crashed below $5 a barrel on Monday, hitting the lowest level since the contract launched in 1983, as the collapse in demand triggered by the coronavirus pandemic leaves the world awash with crude that it is struggling to store. West Texas Intermediate, the US marker, lost 74 per cent on Monday, sinking to a low of $4.04 a barrel, on warnings that storage could fill up within weeks — including at the benchmark’s delivery hub of Cushing, Oklahoma. Lockdowns imposed in many of the world’s major economies have sent crude demand tumbling by as much as a third, leaving the industry facing what Jefferies analyst Jason Gammel called perhaps “the bleakest oil macro outlook” he had ever seen.

Physical grades in many North American regions have fallen into the low single digits — with some contracts changing hands for as little as $2 a barrel — reflecting a dearth of buyers able to take delivery, even as prices for later contracts have held up marginally better due to some investors betting on an eventual rebound. In Canada, spot prices for Alberta’s heavy oil, which sells at a deep discount to WTI, traded at below minus $6 a barrel in the spot market, according to traders and brokers.

The possibility of negative prices for the main US grades is growing, with the prospect that producers could pay traders to take oil off their hands to try and forestall the shutdown of fields ahead of their rivals. Stephen Schork, editor of oil-market newsletter The Schork Report, said he expected access to storage capacity in the US to be exhausted within the next two weeks — and cautioned that the collapse of the country’s oil consumption was accelerating.

“It just gets uglier from here,” Mr Schork said, adding that sharply rising unemployment numbers meant fewer and fewer Americans would be driving, hurting petrol demand even during its peak summer months. “This summer is dead on arrival. The biggest demand months are not going to happen,” he said. Part of the rapid decline in WTI prices reflects technicalities around the contract for oil to be delivered in May, which expires on Tuesday while short-term storage issues are severe. Still, WTI for June delivery was also down 10 per cent at $22.62, while Brent crude, the international marker, dropped 5 per cent to $26.72. Line chart of West Texas Intermediate showing US oil tumbles to lowest level since the mid-1980s.

Traders said contracts for later delivery were being propped up by hopes the worst of the demand destruction could be passed by the summer, if lockdowns and travel bans are eased. But others are questioning whether the record-breaking gaps between spot sales and future prices are sustainable. “The May contract expires tomorrow so volume on it is going to be very light. The June contract is more reflective of the changes,” said Olivier Jakob at Petromatrix. “That being said, oil is very weak . . . The big thing right now is destruction of demand due to the virus.” Wall Street opened lower, dragged down by weakness in energy stocks. The S&P 500 was down 0.5 per cent in New York. The sub index for energy was off 4.5 per cent.

European indices steadied, with the continent-wide Stoxx 600 closing 0.7 per cent higher, while London’s FTSE 100 and Frankfurt’s Dax gained 0.45 per cent. Crude prices have plummeted this year on the possibility that the coronavirus outbreak will cause a deep global recession. The number of Covid-19 infections worldwide topped 2.4m as of Monday, according to Johns Hopkins data, with more than 165,000 dead. The latest developments “painted a grim picture of a world still firmly in the grip of the coronavirus crisis, amplifying worries about sinking oil demand”, said Vandana Hari, founder of Vanda Insights, a Singapore-based energy research firm.

The deepening fall in oil prices has come despite an Opec-backed deal to cut roughly 10 per cent of global crude supply. Reductions of varying magnitude are planned to run until April 2022 as part of efforts to stabilise prices. Recommended Q&AOil Coronavirus, Opec and shale: FT energy reporters answer your questions on the oil industry Baker Hughes data on Friday showed that the number of active oil rigs in the US has dropped by more than a third over the past month. But signs of curtailed US supply have done little to boost prices.

“Too much oil, with nowhere to put it,” said Kit Juckes, a senior strategist at Société Générale in London, noting that “oil-sensitive currencies are under pressure again”. Equity markets in Asia came under pressure earlier in the session. Japan’s benchmark Topix fell 0.7 per cent and Australia’s S&P/ASX 200 shed 2.5 per cent, while Hong Kong’s Hang Seng was flat. In fixed income, the yield on the 10-year US Treasury was little changed at 0.623 per cent.

Hard to read as its all one bloody long sentence, paragraph. FIXED
 
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