Oil Prices

2020.03.15【文茜世界周報】瘟疫蔓延加上油價崩盤　全球股市應聲倒
https://www.youtube.com/watch?v=HuHfD-wL...AU&index=4

Global oil refiners shut down as coronavirus destroys demand
https://www.reuters.com/article/us-healt...SKBN21D19K

The Global Oil Market Is Broken, Drowning in Crude Nobody Needs
https://www.bloomberg.com/news/articles/...emium-asia

How Saudi Arabia Can Save the Global Oil Industry
https://www.bloomberg.com/opinion/articl...nd=opinion

(When would the global economy recovers? The OPEC+ might gave you a clue....and then reduced to 6 million barrels for another 16 months, until April 2022.)


In fairness, the OPEC+ deal is grand in its scope, given the size of the cuts and their duration. The 20 producers taking part will initially cut output by 10 million barrels a day, or 23%, for two months — May and June. That will then be tapered to 8 million barrels a day until the end of the year, and then reduced to 6 million barrels for another 16 months, until April 2022.

The U.S.-Saudi-Russia Oil Cease-Fire Won’t Last
https://www.bloomberg.com/opinion/articl...-last-long

Yes, OPEC+ oil ministers are advised by an army of well qualified advisors. But i do remember that when they (OPEC) got their last decision wrong in Dec 1997 (an increase), it set the stage for a decade of low oil prices with the Asian Economic miracle evaporating, Russia default in 1998 and Y2K crash.

The cure for low prices are low prices and the decade low of oil prices purged out most new capex, merged oil majors and forced workers permanently away from them. That probably did anything more than others for setting the stage for our own Keppel FELS and SembMarine to capture the subsequent offshore oil rig boom (right place at the right time with the right expertise) as prices reverted to the mean.

The subsequent decade-long boom of high prices attracted new capex and new technology - The Baku in the Caspian Seas finally came online, the Brazilians started their offshore ops and of course, the most publicized horizontal fracturing of US shale. The cure of high prices are high prices. Most of us, as net consumers of oil probably cheered a little, even though our "hedges" towards high oil prices like our investments went downhill.

Actually, with multiple "daggers" since the 2015 oil collapse, we are probably still mid way in this inevitable decade of low prices (Covid-19 been the latest "dagger")? The cure for low prices are low prices and it remains to be seen when, but reversion to the mean always return with a vengence.

US oil prices on pace for their worst day ever as storage runs out
* The May contract of U.S. West Texas Intermediate (WTI) futures fell to $11.66 a barrel on Monday, down more than 36%. It means the price grade is on track to register its worst day back to contract inception in 1983.
* To be sure, the May contract expires on Tuesday, thus leaving it exposed to weaker trading volumes and more extreme market moves.
* The June contract of WTI, which is more actively traded, stood at $22.29 a barrel, almost 11% lower.
* “The curves are saying we have a big problem with the storage of oil right now,” Bjarne Schieldrop, chief commodities analyst at SEB, told CNBC via email.

Sam Meredith
PUBLISHED MON, APR 20 20204:49 AM EDT

U.S. oil prices were on track for their worst day on record on Monday, with crude storage facilities filling rapidly as the coronavirus pandemic continues to crush demand.

The May contract of U.S. West Texas Intermediate (WTI) futures fell to $11.54 a barrel on Monday, down more than 36%. It means the price grade is on pace to register its worst day back to contract inception in 1983.

To be sure, the May contract expires on Tuesday, thus leaving it exposed to weaker trading volumes and more extreme market moves. The June contract of WTI, which is more actively traded, stood at $22.29 a barrel, almost 11% lower.

Meanwhile, international benchmark Brent crude stood at $26.41 on Monday, around 6% lower for the session.

It comes amid heightened concern that the volume of oil held in U.S. storage is rising sharply, with the coronavirus crisis compounding the problem by dramatically reducing consumption.

“The current forward crude oil curves for Brent and WTI are now in very deep contango, but the contango is also very front-loaded,” Bjarne Schieldrop, chief commodities analyst at SEB, told CNBC via email.

A contango market implies oil traders believe crude prices will rally in the future, encouraging them to store oil now and to sell at a later date.



More details in https://www.cnbc.com/2020/04/20/coronavi...s-out.html

Unless you have a trading position on oil contracts, or oil ETFs (US Oil Fund), this fluctuation is really a non-event.

In the long-term, when demand for crude returns, most of the oil industry should continue to do okay. Production projects are planned and executed with expectations of 30-50 years of production. The oil majors will continue to spend in exploration and production projects to replace their reserves.

Obviously, at higher risk of being canned will be those higher-cost offshore projects. And the poorly capitalised subcontractors which may be unable to survive this period of low business.

There is some difference- shale oil.

The life span of a drilling rig is only 1-2 years. For that, the shale oil drillers are price sensitive creatures

(21-04-2020, 09:18 PM)CY09 Wrote: There is some difference- shale oil.

The life span of a drilling rig is only 1-2 years. For that, the shale oil drillers are price sensitive creatures

So do u think shale companies gonna bankrupt en masse causing some serious effect on American banks??