What's going to happen to crude oil

Isn't the problem the refineries? If they shut down it's almost impossible to get them going again?
Mainly the cracker tower is the bugger to get back on line, I think.
Brother-in-law used to be on call just for that giving a wobble.
 

endure

GCM
Can't we buy it all up and stick it back down the hole (under the north sea)? :)
 

Robme

On ROPS
On ROPs
Funny how when the Iranian dust-off over the New Year resulted in the UK pump price went up literally overnight, but any reduction in said price is dependant on 'cheaper' oil feeding through.

Blatent price-gouging.
Which under the emergency powers the Government granted itself, should and could be made illegal. Same as shops/suppliers/customers. It’s the total hands off approach unless it’s PPE of course which is making the government look like ther are out of step to the real world.
The Health bods have said they are worried that if the public have to wear face masks, that will deny the NHS? Well on the news last night there are upwards of 6,000 manufactures who are hitting a stone wall when it comes to providing PPE. And here we are wibbling about PPE coming from Turkey? How long would it take 6,000 UK Manufacturers to produce 84tons of PPE? A bit less than 3 days and oh it hasn’t arrived yet.
 

Robme

On ROPS
On ROPs
I was once told by a stinky pet op that petrol goes off and never to buy from out of the way fuel stations.
Back in my biking days, every Spring, my local dealer would email everybody and remind them to stick ‘fresh’ fuel in the tank, draining off the old stuff if they could. Improved performance as well as cut down on problems with supply to the engine, or so he said.
 

Robme

On ROPS
On ROPs
Before and during World War Two cavernous underground oil tanks at various naval bases. Those places still exist so why can they not be used as a buffer against interruptions to oil shipments such as mines in the Strait of Hormuz?

Or mines in the Suex Canal, or our own ports....



They seem to have missed Business 101.
If these facilities still exist, then I am sure Greta Acolytes would man the barricades to ensure they were never filled/used.
 
Isn't the problem the refineries? If they shut down it's almost impossible to get them going again?
There's an issue with oil fields as well. The collapse in demand has been so rapid that producers haven't had time to plan and implement proper shut downs. They need to empty out pipes and particularly to make sure there aren't any pipe with water sitting in them which could corrode pipes or freeze in them. There's also issues with fields that use steam to produce the oil. If you shut them down, will you be able to get them going again or will the pipes be clogged up? A shut down can take weeks to plan and a month to implement.

Refineries do get shut down on a regular basis, annual maintenance being an obvious example. However again, these need to be planned and scheduled events, not a crash stop.

In both cases there is the extra problem that additional workers may need to be brought in to do the work involved in a proper shut down, but "social distancing" measures pose a problem in accommodating them.

And of course once everything is shut down, it will take time to get it going again.
 
In a year's time oil will $150p/barrel
I'd like to believe that, not so high, but just stay stable at a good price for a few years.

This industry is dominated by pure greed.

I've worked in offshore drilling off and on since 2007. This is the third oil crash I will have to endure. The industry is very boom and bust. Its either a feast or a famine. During the previous down turns I mobilised back into the army and went on tour. Was a good stop gap to keep my family fed and the wolves away from our door while things picked back up.

I'm not sure how this one will work out. We are 5 years on from the last wobble and I wouldn't say it has been a healthy recovery, more like it has just spluttered along breaking even. Like it is diseased or something. Companies have cut back to the bare bones and are operating on a shoestring with very tight margins.

Some drilling companies are in real trouble right now and I would not be surprised if we see some bankruptcy's rolling out. Valeris (Ensco-Rowan) and Diamond looking shaky, maybe Noble too.

The company I'm employed by look like they can weather this storm as they don't appear to have any debt maturities until 2022, but like everyone else its completely at the mercy of fate and how the next months turn out.

This will be a big shake up for the industry, maybe even kill off shale oil for good. Will be interesting to see the consequences of that when the dust settles.
 
Last edited:

holyphuc

Old-Salt
My brother in law who is in finance rekons the Saudis need an oil price of $80 per barrel to cover their spending, their bond issue last week was only two times over subscribed compared to six times for another country that I've forgotten due to excess red wine. He thinks that next time they issue a bond the markets are going to tell them to do one.
 
My brother in law who is in finance rekons the Saudis need an oil price of $80 per barrel to cover their spending, their bond issue last week was only two times over subscribed compared to six times for another country that I've forgotten due to excess red wine. He thinks that next time they issue a bond the markets are going to tell them to do one.
And yet, the Saudi Government achieved a fiscal surplus in 2019 (for the first time since 2014) despite the average price of Brent crude being only $64.
 
Back in my biking days, every Spring, my local dealer would email everybody and remind them to stick ‘fresh’ fuel in the tank, draining off the old stuff if they could. Improved performance as well as cut down on problems with supply to the engine, or so he said.
Is there no topic that you have either direct experience of. Or are a subject matter expert in.
 
The following explanation is doing the rounds in the O&G community, so some of you might have seen it already.

*
Why WTI Crude Oil traded at minus -$37


Imagine the following...you pay $500 today and commit to receiving an escort at your house in 15 days. Cos your wife is traveling. This is called a futures contract.

Unfortunately, lockdown came and your wife will be home for the next 60 days.

You do not want this woman to show up at your house at all and try to pass this futures contract to someone else.

Only you cannot sell this commitment because nobody can receive the escort at home anymore. Everyone is in full storage (their balls) with wife.

To make matters worse, not even the pimp (Chicago Mercantile exchange) has more room to receive girls because his house is crowded with girls.

So you will pay anyone just to take the girl off your hands.

Do you now understand why oil has a negative price when the contract is delivered?
 
The following explanation is doing the rounds in the O&G community, so some of you might have seen it already.

*
Why WTI Crude Oil traded at minus -$37


Imagine the following...you pay $500 today and commit to receiving an escort at your house in 15 days. Cos your wife is traveling. This is called a futures contract.

Unfortunately, lockdown came and your wife will be home for the next 60 days.

You do not want this woman to show up at your house at all and try to pass this futures contract to someone else.

Only you cannot sell this commitment because nobody can receive the escort at home anymore. Everyone is in full storage (their balls) with wife.

To make matters worse, not even the pimp (Chicago Mercantile exchange) has more room to receive girls because his house is crowded with girls.

So you will pay anyone just to take the girl off your hands.

Do you now understand why oil has a negative price when the contract is delivered?
I received a copy of that from a Venezuelan friend this afternoon... It’s a very small world sometimes.
 
The following explanation is doing the rounds in the O&G community, so some of you might have seen it already.

*
Why WTI Crude Oil traded at minus -$37


Imagine the following...you pay $500 today and commit to receiving an escort at your house in 15 days. Cos your wife is traveling. This is called a futures contract.

Unfortunately, lockdown came and your wife will be home for the next 60 days.

You do not want this woman to show up at your house at all and try to pass this futures contract to someone else.

Only you cannot sell this commitment because nobody can receive the escort at home anymore. Everyone is in full storage (their balls) with wife.

To make matters worse, not even the pimp (Chicago Mercantile exchange) has more room to receive girls because his house is crowded with girls.

So you will pay anyone just to take the girl off your hands.

Do you now understand why oil has a negative price when the contract is delivered?
Interesting analogy with an escort.

Another industry in Aberdeen that will be on its knees (not literally).
 

UncivilServant

Old-Salt
The following explanation is doing the rounds in the O&G community, so some of you might have seen it already.

*
Why WTI Crude Oil traded at minus -$37


Imagine the following...you pay $500 today and commit to receiving an escort at your house in 15 days. Cos your wife is traveling. This is called a futures contract.

Unfortunately, lockdown came and your wife will be home for the next 60 days.

You do not want this woman to show up at your house at all and try to pass this futures contract to someone else.

Only you cannot sell this commitment because nobody can receive the escort at home anymore. Everyone is in full storage (their balls) with wife.

To make matters worse, not even the pimp (Chicago Mercantile exchange) has more room to receive girls because his house is crowded with girls.

So you will pay anyone just to take the girl off your hands.

Do you now understand why oil has a negative price when the contract is delivered?
So, err, is the industry f*cked or not?
 
The following is a very interesting interview with a oil industry analyst. He talks about the problems the oil industry faces due to the combination of collapse in demand and the price war between Saudi Arabia and Russia.

He goes into some detail as to why prices have collapsed so much - going actually negative at one point, and also into why a shutting an oil field down completely is a technical problem with long term consequences.

He offers the prediction that the American shale oil industry will take a long time to recover from the current catastrophe, and may never fully recover from it.

He talks primarily from a Canadian perspective, but offers insights into the global oil market that apply around the world. It is roughly 20 minutes long and well worth watching.

 
The following article discusses whether after the pandemic is over fossil fuel consumption will resume to the same level as before, or whether there will be permanent changes in the market leading to only a partial recovery of demand.
COVID-19 wipes out demand for fossil fuels — will they bounce back?

The article does not come to any definite conclusions on this, but rather presents several arguments on either side of the discussion.

On the lower demand side, working from home may become a more permanent feature of life, reducing both commuting and the need for large offices. Working from home may become more practical for many people once the children go back to school.

On the other hand, people will still have their cars and will resume travelling for recreation and tourism again.

Another factor is that the economic recession and higher government debt levels will mean that governments will have less money to spend, either directly or indirectly, on climate change issues.

However, the recession may last for several years and act to depress demand. I will add that there were signs of an oncoming recession before COVID-19 hit, so the pandemic may have acted to accelerate a process that was already underway.

So there are no conclusions to be drawn a this time and there will be continuing uncertainty about the future.
 

Latest Threads

Top