Oil prices could fall to 0
#6807114
03/18/20 01:38 PM
03/18/20 01:38 PM
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Joined: Jul 2016
Posts: 3,928 NY
Canvasback2
OP
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OP
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Joined: Jul 2016
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NY
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Oil prices could fall below zero: Analyst Jonathan Garber Fox BusinessMarch 18, 2020, 11:24 AM EDT
Plunging oil prices could be headed a lot lower – possibly below zero, according to one Wall Street analyst. West Texas Intermediate crude oil, the U.S. benchmark, fell by more than 10 percent Wednesday to near $24 a barrel, a level last seen in April 2002. “Oil prices can go negative,” wrote Paul Sankey, managing director at Mizuho Securities.
CORONAVIRUS CHOKEHOLD ON US WORSENS OIL INDUSTRY'S PAIN
The COVID-19 pandemic has brought the U.S. and global economy to a standstill by prompting “shelter in place” orders, social distancing between people and the cancellation of non-essential travel. The sharp slowdown in economic activity has curtailed the need for oil. If that weren't enough, Saudi Arabia recently slashed oil prices and raised output after Russia refused to join OPEC in deepening production cuts. Oil is a 100 million barrel-per-day market, but Sankey says it’s possible that the economic fallout from the pandemic could zap demand, creating a 20 million barrel-per-day surplus. He says the “physical reality” of the market is that oil is pumped out of the ground and has to be consumed or stored. When the cost of storage goes high enough -- or space runs out -- companies might pay customers to take it. For now, President Trump has ordered the Department of Energy to take advantage of low prices by stepping into the market and buying oil for the Strategic Petroleum Reserve. The reserve can build at 2 million barrels per day, meaning that it has four months until it’s at capacity, Sankey said. By then, he added, high-cost oil from the Bakken shale formation in the U.S. or bitumen from the Canadian oil sands, "prices negatively because it exceeds needs" and requires storage, Sankey wrote. “Negative prices are simply a higher cost of storage than market.” Sankey isn’t the only one on Wall Street who is sounding the alarm about the coming flood of oil. Excess supply from OPEC and Russia, coupled with crumbling demand "are leading to concerns about a surplus that could overwhelm global storage,” wrote Francisco Blanch, a commodity strategist at Bank of America. He warns the demand destruction caused by COVID-19 and the price war between Saudi Arabia and Russia could cause inventories to swell by 900 million barrels in the second quarter alone. He estimates the world currently has about 1.5 billion barrels of available storage. Blanch’s worst-case scenario isn’t as dire as Sankey’s. “In a severe scenario, if the market struggles to find a home for surplus barrels, then oil prices might have to trade down into the teens,” he wrote.
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Re: Oil prices could fall to 0
[Re: Canvasback2]
#6807228
03/18/20 03:16 PM
03/18/20 03:16 PM
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Joined: Aug 2011
Posts: 45,488 james bay frontierOnt.
Boco
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Posts: 45,488
james bay frontierOnt.
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They can pay me to store several 45 gallon drums of gas if they want.I think I could find room to store a few drums.
Forget that fear of gravity-get a little savagery in your life.
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Re: Oil prices could fall to 0
[Re: white17]
#6807427
03/18/20 05:55 PM
03/18/20 05:55 PM
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Joined: Dec 2006
Posts: 1,140 Texas Hill Country
Cedar Hacker
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That is already the case with natural gas producers in some areas. The price of gas is lower than the cost of production so the gas is flared off at the well head. Some companies are PAYING to have it pipelined away. It happened at the Waha Hub in West Texas last year. There was too much gas being produced and not enough pipeline capacity to transport it out. Producers shut in natural gas wells and if oil producers with gas did not flare the gas at the wellhead and sent it down the line to Waha it was flared there and a $6 per mcf was charged the producer for flaring their gas. We still cannot get all the gas to market and what is being sold is dirt cheap, but some of the small producers have to have some kind of cash flow.
Sit on your horse on top of a ridge, look out across the country and tell me there is no God.
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Re: Oil prices could fall to 0
[Re: Canvasback2]
#6807579
03/18/20 07:38 PM
03/18/20 07:38 PM
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Joined: Jan 2007
Posts: 2,127 mo.
nate
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Maybe they'll cut the ethonal. Good deal if they do.
Last edited by nate; 03/18/20 07:38 PM.
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Re: Oil prices could fall to 0
[Re: Trapper7]
#6807665
03/18/20 08:27 PM
03/18/20 08:27 PM
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Joined: May 2011
Posts: 1,181 Golconda, IL
nramemb
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You mean oil prices so low, they'd have to PAY you to take it???? I will take 10,000,000 barrels Friday is a good delivery day for me
Last edited by nramemb; 03/18/20 08:29 PM.
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Re: Oil prices could fall to 0
[Re: Canvasback2]
#6807761
03/18/20 09:40 PM
03/18/20 09:40 PM
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Joined: Dec 2009
Posts: 20,331 The Hill Country of Texas
Leftlane
"HOSS"
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"HOSS"
Joined: Dec 2009
Posts: 20,331
The Hill Country of Texas
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Its a good thing I'm cruising on fumes or I'd be buying a crap load of oil futures. If covid 19 had the ability to cut our population in half, the day we run out of oil would be extended 50 yrs or more. It does NOT and the price of oil will not stay down long.
And yes, as a good ol boy in Texas I have inside information
“What’s good for me may not be good for the weak minded.” Captain Gus McCrae- Texas Rangers
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Re: Oil prices could fall to 0
[Re: Team V]
#6807765
03/18/20 09:41 PM
03/18/20 09:41 PM
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Joined: Aug 2008
Posts: 1,629 alaska
3 Fingers
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My son works on north slope of ALaska in the oil fields was told about a hr ago to pack up everyone is going home . Heard that. Shared services (ConocoPhillips and BP) no more flights after 5 tonight.
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Re: Oil prices could fall to 0
[Re: 3 Fingers]
#6807800
03/18/20 10:05 PM
03/18/20 10:05 PM
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Joined: Mar 2007
Posts: 35,168 McGrath, AK
white17
"General (Mr.Sunshine) Washington"
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"General (Mr.Sunshine) Washington"
Joined: Mar 2007
Posts: 35,168
McGrath, AK
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My son works on north slope of ALaska in the oil fields was told about a hr ago to pack up everyone is going home . Heard that. Shared services (ConocoPhillips and BP) no more flights after 5 tonight. That is amazing !!
Mean As Nails
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Re: Oil prices could fall to 0
[Re: Canvasback2]
#6807825
03/18/20 10:23 PM
03/18/20 10:23 PM
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Joined: Mar 2014
Posts: 3,655 Central Texas
Chancey
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My brother has been welding for Marathon Oil for years. He survived the 2014-2015 hiccup while the company let everyone else go. He told me Monday that he had work lined out for 50 hours/week through August, but that Marathon told them that was gone and this ride was gonna be a lot worse than the last one. He was seriously concerned for his job.
I've been in south Texas working, and hotels are empty compared booming one month ago.
Resident Conspiracy Theorist Accused Moron, Nazi, Low IQ, and Putin Fan Boy
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Re: Oil prices could fall to 0
[Re: Canvasback2]
#6807836
03/18/20 10:28 PM
03/18/20 10:28 PM
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Joined: Mar 2014
Posts: 3,655 Central Texas
Chancey
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Central Texas
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I know we like gas prices to be <$2.00/per gallon, but the reality is that most of us can live with paying around 2.25-2.50/gallon. That's where it is when oil prices are around $50-60/barrel.
Keeps everyone working and life is better. Does not matter how low gas goes if you don't have a job to buy it.
Resident Conspiracy Theorist Accused Moron, Nazi, Low IQ, and Putin Fan Boy
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