Oil Apocalypse . . . . Putin said, "Nyet" to Mohammed bin Salman

[Gerry Maddoux + 3,627]

1 hour ago, cbrasher1 said:

it's rough out here, watching the freefall...gonna finish this oxy frac job tonight then onto a 4 well pad, if i understand correctly it takes a few months for price to cycle into the actual working side? man I just hope I can keep on keeping on...gonna be a rough ride 

Hang on, it's going to be fine. 

[kshithij Sharma + 78]

On 3/8/2020 at 12:34 AM, wrs said:

Yes certainly, I get that, I pointed out it was written by KSA but key point in my mind is that it was written last fall.  So it was positioning for the Aramco IPO but it probably shaped their thinking about how Russia would feel about the current prices.  To me, Russia has some other agenda that they think gives them greater benefit.  I suppose they don't mind losing money on oil they are giving to China but I don't really understand that either.  Why help the idiots that caused the oil price collapse.  Anyone selling to the Chinese right now is stupid.

Petrodollar works in an indirect manner whereby USA prints dollars and gives it to Arabs to compensate for their low oil prices. This means that even when oil prices are at 30 dollar, Arabs will still be getting 100 dollars by printing currency and manipulating dollars. Only those oil producers who are vulnerable are affected by low oil prices as they will be excluded from this petrodollar arrangement. Those countries who support Arabs or have a big share in oil supply to become indispensable will also be a part of Petrodollar. The rest will be subjected to arm twisting

In today's case, it appears that this is a tool to weaken Iranian oil money. Iran was trading oil via Russia or other clandestine channels. Now, that will be severely hit. Since Iran is excluded from Petrodollar, Iran will not get any extra money in the form of dollar printing and hence will not get any money to support their proxy activity.

Low oil price doesn't mean anything except as a tool for currency manipulation and political arm twisting

[kshithij Sharma + 78]

On 3/7/2020 at 5:10 AM, Frank Schuler said:

Russia endured with prices at $28-$33/barrel in Oct 2015-Feb 2016 AND in Oct 2015 arrived in Syria to begin operations and turn the tide of war. So they have seen lower prices than the current. Devalued ruble is an important factor which you folks are ignoring. At 63-68/$ their oil and gas companies can still profit. Whereas US shale, Canadian oil sands, LNG might not. Saudis stuck in Yemen and with big budget deficits... but still lots of cash stored. Moscow has $570 bn forex reserve now. Perhaps they expect shale bankruptcies to clear the field by Fall 2020. 

USA oil is controlled by Rockefellers. Entire western oil industry and their oil manufacturing and technology is controlled by Rockefellers for about 130 years now. Using the oil money of 130 years, they have invested in banking, retail, E-Giants, car companies etc. There is hardly any real losses to them. Losses in oil will be compensated by profit in other industry. Shale is a means of USA foreign policy

On 3/7/2020 at 11:46 AM, 0R0 said:

Russia's Ruble is essentially an oil unit, its' exchange rate perfectly matching the oil price. Their costs are internal as is their spending, so they care little about the exchange rates, their people - who do care what imports cost them, obviously matter less to Putin, who has never defended the currency.  

Russia is self sufficient and hence doesn't care much about imports. Only imports for Russians which matter are electronics, generic pharmaceuticals from China & India and semiconductor chipsets. Rest are all easily substitutable. Why would Russia care for imports in such a case?

[cbrasher1 + 272]

saw this on russian instagram oil page

[Zhong Lu + 845]

Thank you.  Time to hold.  Perhaps add.  

[notsonice + 1,080]

Priming the Pump. Rosneft is delighted with the breakup. It can now move to boost its market share, said spokesman Mikhail Leontiev.

“If you always give in to partners, you are no longer partners. It’s called something else,” he told Bloomberg. “Let’s see how American shale exploration feels under these conditions.”  From all of this we will see a major recession building all over the world just because leaders of the world think Oil can be used as a weapon.

[0R0 + 6,251]

1 hour ago, Zhong Lu said:

Thank you.  Time to hold.  Perhaps add.  

That is what I am thinking. When the technical targets are reached in a panic compressing a couple of month's worth of grinding into 2 days surrounding a weekend then you probably have a wash out. Just let the market open for the managed money and ETFs  to barf out as the machines trend follow crude into the ground and setup for a short squeeze. I had technical targets to 34-5 and a bit over 27 for WTI, I don't have any specific targets lower than that from the charts as they are. 

Would be interesting to look at pennies on the dollar junk debt of weak frackers. Stock of the ones with strong balance sheets will be also interesting. Beyond that, tiny positions in the middle of the road frackers and junky ones may provide option like returns on a rebound so are worthy of a basket approach for very small positions. 

 

[0R0 + 6,251]

2 hours ago, cbrasher1 said:

saw this on russian instagram oil page

That was what I thought Saudi is doing. Targeting Russian customers with huge discounts to pry them away from Russia so that it does not have revenue at all. So that whatever revenue there is to be had, it would be Saudi that would get it.

I think that MBS is aiming to force Russia to turn its tanker fleet into floating storage so they can't load any more oil and would be forced to shut down some production.

Edited March 9, 2020 by 0R0

[0R0 + 6,251]

1 hour ago, notsonice said:

Priming the Pump. Rosneft is delighted with the breakup. It can now move to boost its market share, said spokesman Mikhail Leontiev.

“If you always give in to partners, you are no longer partners. It’s called something else,” he told Bloomberg. “Let’s see how American shale exploration feels under these conditions.”  From all of this we will see a major recession building all over the world just because leaders of the world think Oil can be used as a weapon.

Their concern with US shale is obsessive. I don't see why it bothers Rossneft's Leontiev so much. 

Putin seems to think oil and NG are geopolitical tools rather than a business. So that would be Leontiev''s take on Putin as well?

[Douglas Buckland + 6,308]

“Both Russia and the major OPEC producers have been openly annoyed with the refusal of the US producers to participate in past production cuts and the fact that the US industry has been the major beneficiary of the price support”

They can be annoyed all they want, but both understand that in a free market economy, as opposed to a government controlled economy, the government can not mandate a production cut to industry, this is akin to price fixing.

[0R0 + 6,251]

3 minutes ago, Douglas Buckland said:

“Both Russia and the major OPEC producers have been openly annoyed with the refusal of the US producers to participate in past production cuts and the fact that the US industry has been the major beneficiary of the price support”

They can be annoyed all they want, but both understand that in a free market economy, as opposed to a government controlled economy, the government can not mandate a production cut to industry, this is akin to price fixing.

I really don't understand where their thinking comes from. 

Don't they understand a thing about the principles of the US?

[Douglas Buckland + 6,308]

2 minutes ago, 0R0 said:

I really don't understand where their thinking comes from. 

Don't they understand a thing about the principles of the US?

It probably makes good anti-American press for those who do not understand what a free market is and are too lazy to educate themselves.

[0R0 + 6,251]

4 minutes ago, Douglas Buckland said:

It probably makes good anti-American press for those who do not understand what a free market is and are too lazy to educate themselves.

It isn't an anti American press issue, it is a basic misunderstanding of how the US system works. The earnestly don't get it. They don't understand limited powers. That there is only so far a president can go, and deliberately ignoring what anti trust law says would land him in legal trouble.  They also don't get that the US is mainly an oil consumer, only 5% of the oil is going out of the country. As any other oil consumer, the US thrives on cheap energy, particularly oil.

[Douglas Buckland + 6,308]

Absolutely correct! But if you can get the ‘unwashed masses’ to think that America is ‘not doing their part’, you enforce a false narrative.

Don’t get me wrong, if everyone else agrees to cut production then the US should follow suit in an effort to dry up the alleged surplus and get the price back to a reasonable level for everyone.

How you do that in a free market, especially when many shale oil players are one breath away from bankruptcy, is the issue.

If the price of oil keeps dropping it won’t be an issue, the American shale play will be dead....until the price picks back up again.

[Guillaume Albasini + 851]

In a free market you can't force producers to reduce production with a cartel meeting.... But you can wipe out the weaker producers lowering the price until it gets unsustainable for them.

Let's guess who are the weaker producers...

[Douglas Buckland + 6,308]

1 hour ago, Guillaume Albasini said:

In a free market you can't force producers to reduce production with a cartel meeting.... But you can wipe out the weaker producers lowering the price until it gets unsustainable for them.

Let's guess who are the weaker producers...

Okay, the US shale oil producers are the weaker players. This is obvious to all concerned. But, by targeting a specific industry, in a specific country, you open yourself up to retaliation.

For example, hypothetically, the US gets annoyed at Saudi for driving the American shale oil industry into the dirt and says, ‘Fair enough, go shop for your defense and training needs elsewhere’. Who are they going to turn to? Russia is not an option at this time, politically Israel is not an option, China would want other concessions, and so forth.

This game is not solely played in the ‘oil & gas’ arena. 

[D Coyne + 305]

On 3/7/2020 at 11:54 PM, 0R0 said:

Looks allot more like oil than the dollar

See @surrept33 ruble and oil chart

The oil is priced in dollars, so your oil chart is basically a dollar chart.

[D Coyne + 305]

4 hours ago, Douglas Buckland said:

“Both Russia and the major OPEC producers have been openly annoyed with the refusal of the US producers to participate in past production cuts and the fact that the US industry has been the major beneficiary of the price support”

They can be annoyed all they want, but both understand that in a free market economy, as opposed to a government controlled economy, the government can not mandate a production cut to industry, this is akin to price fixing.

Doug,

Do you remember RRC "allowables" from 1945 to 1970?  

I agree RRC would be unlikely to return to those days, but my understanding is the the US was considered a free market capitalist economy from 1945 to 1970.

[El Nikko + 2,145]

 

https://hottakeoftheday.com/manic-monday/

[D Coyne + 305]

Futures market very interesting, long dated futures contract is $50/bo (Dec 2029), while front month at $31.46/bo.  Dec 2022 at about $44/bo down from previous close at $48/bo.

 

https://www.cmegroup.com/trading/energy/crude-oil/light-sweet-crude.html?ds_medium=cpc&gclid=Cj0KCQjw0pfzBRCOARIsANi0g0tvW7zajpvmFXBuZSLMaQlvYEGOwUMH4AdgafilgTdcGxuHXzuMRK0aAjmrEALw_wcB&gclsrc=aw.ds

[wrs + 893]

Well one thing Trump could do but won't.  He could put tariffs on all ME oil.  But Trump doesn't care about the oil business so he won't.

[Uvuvwevwevwe Onyetenyevwe Ugwemuhwem Osas + 96]

Pull up!  Pull up!

https://www.youtube.com/watch?v=Xlr2ZMTc52E

 

[Gerry Maddoux + 3,627]

45 minutes ago, wrs said:

Well one thing Trump could do but won't.  He could put tariffs on all ME oil.  But Trump doesn't care about the oil business so he won't.

Trump cares greatly about Texas votes, though, and he just might enact tariffs. 

[Uvuvwevwevwe Onyetenyevwe Ugwemuhwem Osas + 96]

Russian Ruble is crashing
https://www.xe.com/currencyconverter/convert/?Amount=1&From=USD&To=RUB
https://www.xe.com/currencyconverter/convert/?Amount=1&From=EUR&To=RUB

[El Nikko + 2,145]

13 hours ago, cbrasher1 said:

it's rough out here, watching the freefall...gonna finish this oxy frac job tonight then onto a 4 well pad, if i understand correctly it takes a few months for price to cycle into the actual working side? man I just hope I can keep on keeping on...gonna be a rough ride 

In the last couple it did, the 2014-2015 one which was the worst took us well over 1 year to see every client dry up but I think that's isn't where we're at today. I think oil companies will react much quicker.

Last year we had a mini shock and only had a few months without work.

This one I'd expect it to take 3-4 months at most for work to dry up but there could be companies out there that just drop everything, if they've hedged 50-60% of their production they might be able to survive but some comentators say they should stop everything right now and stop wasting money drilling wells. If you are on linkedIn it's worth following Dave-Ramsden-Wood, he has some interesting takes (not too many positive at the moment), if not here's his website https://hottakeoftheday.com/

Other than that it's yet another 'here we go again' situation. Definately do everything you can to get finances etc in order.

If there is any glimmer of hope it might be that there are some companies out there with money who will pick up rigs for cheap and drill wells while everyone is suffering but I don't know if there would be much point completing them until prices recover...you would know more about that side of things than me. Can you complete and frac a well and leave it idle and is there any point to doing that...or is it better to wait for the prices to go up before completing?

Edited March 9, 2020 by El Nikko